I. Chapter 1: Contracts for the Sale of Land
A. Real Estate Brokers
1. Three types of Listing Agreements:
a. Open Listing- property owner pays listing broker commission if the
broker sells the property. Owner can sell by himself or through another
broker and avoid commission to the listing broker.
b. Exclusive Agency Listing- authorizes only one broker to sell the
property but the owner can still sell as an individual and avoid having to
pay the listing agent a commission.
c. Exclusive Right to Sell Agreement- Sale of property by anyone
obligates the property owner to pay a commission to the listing agent.
Drake v. Hosley
– Hosley was the listing agent hired in March 84 to sell North Pole property prior to end
– Drake signed a K w/ a buyer produced by Hosley in late March
– K stated would close w/in 10 days of proof of clean title and seller would pay 10%
– Hosley dealt w/ Drake’s lawyer and originally slated closing for 4/11
– Hosley notified Drake’s lawyer closing couldn’t occur by 11th
– Drake’s lawyer called off sale and sold to another party
– Hosley showed on the 12th w/ $33,000 ready to close
– Drake liable for the 10% commission b/c Hosley produced a ready, willing, and able
person to purchase the property who K’d to buy the property.
– per the K, the buyer had 10 days from proof of clean title to close
– Drake sold during this contract period
– Drake argued to follow the Dobbs Rule:
– commission payable only after performance of the K (unless seller breaches and
commission is payable in this instance as well).
– AK followed the majority rule and that is that commission is entitled to the broker when the broker has produced a ready willing and able buyer
– Drake argues this can’t be evaluated until closing- how do you know if someone
is ready, able, and willing until they show for closing?- Court didn’t buy this and
MAJORITY RULE- (traditional rule)- a broker is entitled to a commission when he
produces a buyer ready willing and able to purchase the property on the seller’s
terms even if the sale is not completed.
DOBBS RULE- (Ellsworth Dobbs, Inc. v. Johnson)- a real estate broker does not earn a
ct to jurisdiction)
– signature must be by the person trying to resist its enforcement
– Do not need non-essential terms (eg// closing date, time, etc.)
– ANY writing w/ necessary elements will do: eg// check, letter, or deed.
– most residential contracts are on form contracts
– representations and warranties = allocations of risk
Why require a writing?
– put pressure on the parties
– big decisions- very expensive- protection
– reconfirm the seller’s obligation
1. Types of Contracts
a. Short Term
– including earnest money, deposit receipt, or binder contract
– contracts covering the executory period- used to transfer title
b. Real-estate Installment Contract- owner financing- deed after last pymnt
2. Statute of Frauds and Part Performance
– Part performance is a judicially created exception to the Statute of Frauds