Avoiding Real Estate Brokerage Disputes in South Florida

The South Florida real estate market is continuing to thrive. Unfortunately, the numerous real estate transactions taking place will likely result in some real estate brokerage disputes. Some brokers may have difficulty collecting on their brokerage agreements. Others may be sued by a client that believes the broker did something wrong. Our Fort Lauderdale real estate brokerage dispute attorneys have experience handling these types of cases.

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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.

In most commercial and residential real property transactions, sellers will utilize a real estate broker to market and sell their property.  Often times, and preferably, the broker and seller will memorialize their relationship in writing by virtue of a real estate brokerage agreement, likely in the form of a listing agreement.

Listing agreements are generally set forth on pre-fabricated forms and are usually prepared by the real estate broker or agent. More times than not, listing agreements will favor the broker.    Sellers of both residential and commercial property will often have an attorney review their purchase and sale contracts, but not their brokerage agreements.  This is a mistake that could end up costing a seller thousands of dollars.

Generally, a broker or agent may not place, or cause to be placed, in the public records any writing which purports to affect the title of, or encumber real property.  Fla. Stat. § 475.42(j) (2012).  However, a broker may be able to place a lien on your property where it is expressly permitted by a contractual agreement, such as a listing agreement.  Id.  Why would a broker want to place a lien on your property?  For the purposes of securing its commission pursuant to the listing agreement.  

Should you unknowingly agree to such a provision, and a lien is ultimately placed on your property, not only will the lien inhibit your ability to dispose of the property, but it can also cost you significant attorneys’ fees to have the lien successfully removed from the property.   

There are additional hidden issues in a listing agreement that make the decision to hire an attorney a prudent one.  For example, where a buyer defaults under the purchase and sale contract, the seller generally has the option to retain the buyer’s deposit as liquidated damages. A listing agreement may contain a provision entitling the broker to a certain percentage of this retained deposit, sometimes up to as much as 50%. Where commercial properties or luxury residential real estate are involved, the deposit will likely be significant.

Accordingly, if detailed attention is not paid to a brokerage agreement, a seller may unknowingly consent to a lien being placed on their property or forfeit a large percentage of their retained deposit.  Your interests will be better protected by having an attorney review these agreements before you execute them.