Broker’s Entitlement to Commission

Posted on: November 8, 2012

Real estate brokers are employed by property sellers to assist in finding a purchaser or producing a sale. The terms of the broker’s employment may be outlined in a listing agreement. The listing agreement indicates what a broker must do in order to receive a commission. Once the broker either finds a purchaser or produces a sale, depending on the listing agreement, the broker is entitled to his commission. Problems concerning broker commissions can arise where a sale is negotiated without the involvement of the broker during the life of the listing agreement. This scenario is discussed in Wood/Fay Realty Group, Inc. v. New Aquarius Corp., 842 So. 2d 914 (Fla. 3d DCA 2003).

In this case, Wood/Fay Realty Group, Inc. (the “Firm”), a real estate brokerage firm, had an exclusive listing agreement on a mobile home park. The listing agreement provided that a commission is due where there is a transfer, or a contract to transfer, the mobile home park within 180 days after the end of the listing agreement to any prospects with whom communications regarding the mobile home park were had before the listing agreement ended. The listing agreement also had an extension clause which extended the listing agreement through the date of actual closing where there is a sales contract made during the life of the listing agreement. Also under the listing agreement, Stanley G. Tate (the “Receiver”), receiver for the mobile home property being sold, was obligated to immediately refer all questions about the mobile home park’s sale to the Firm.

During the life of the listing agreement, a mobile home park company executed a contract to purchase the mobile home park. The sales contract included an option to cancel which terminated on April 1, 1997. Three weeks after the listing agreement was originally supposed to end and during the existence of the sales contract with the mobile home park company, the Receiver spoke with a representative of New Aquarius Corporation (the “Buyer”). Ten days after this communication, the sales contract was cancelled. Two days after the cancellation, on April 2, 1997, the Buyer made an offer on the mobile home park, which the Receiver accepted. No commission was paid to the Firm.

The Firm brought an action against the Buyer and the Receiver seeking the commission. The Circuit Court decided in favor of the Buyer and the Receiver. On cross-appeals, Florida’s Third District Court of Appeal held that: (1) the Buyer was a “prospect” under the listing agreement, and (2) the Receiver’s canceled sales contract with the mobile home park company extended the duration of the listing agreement, requiring the Receiver to inform the Firm of the Buyer’s interest in property so that the Firm could facilitate the sale.

If you are a real estate broker and have been excluded from sale negotiations or are a property seller and are being accused of excluding a broker from sale negotiations, contact the real estate litigation attorneys at Schecter Law today at (954) 779-7009.