The Situation:

In 2007, ReMax Select, LLC, a real estate broker, solicited a single-party listing contract from a property owner. The property owner accepted the single-party listing agreement and ReMax Select delivered an Offer to Purchase to the property owner from the party identified in the listing agreement.

Home Sale CommissionThe property owner accepted the Offer to Purchase presented by ReMax Select, but the buyer defaulted. The property owner obtained an Order for Specific Performance, requiring that the buyer purchase the subject property, however, the court was unable to enforce its order as the buyer was unable to obtain the financing necessary to acquire the property. Ultimately, the property owner released the defaulting buyer in exchange for the buyer’s reimbursement of holding expenses for the period of time the purchase and sale contract was pending. The buyer subsequently filed bankruptcy.

ReMax Select brought an action against the seller for its full commission under the listing agreement as though the sale had occurred. Appealing the circuit court’s decision that a broker cannot recover a commission where the transaction fails to close through no fault of the seller, ReMax Select has argued to the Wisconsin Court of Appeals that it earned a full commission because a binding contract had been entered into between the property owner and buyer, despite the buyer’s inability to finance the purchase of the property.

The Outcome: Seller Must Pay  a Listing Broker Full Commission

The Wisconsin Realtors® Association filed a brief in the Wisconsin Court of Appeals case as an interested party. The Wisconsin Realtors® Association has taken the position that, “if the buyer’s valid written offer is accepted so as to constitute an enforceable contract, then the owner must pay commission, even if the buyer later defaults.” The Wisconsin Realtors® Association further argues that it is the seller’s obligation to investigate the buyer, even in circumstances where the listing broker solicits a property owner for the opportunity to present that specific buyer to the seller.

Sellers should be  concerned as to the position taken by ReMax Select, LLC and the Wisconsin Realtors® Association. According to the arguments advanced by ReMax Select and the Wisconsin Realtors® Association, a seller must pay a listing broker full commission even though the transaction fails to close through no fault of the seller.

Attorney Terry Gerbers is a former member of the LLC that was the seller in the subject transaction. For further information on the Wisconsin Realtors Association’s position, or legal guidance through a commercial or residential real estate transaction, please contact Gerbers Law.

 

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