Warren family and Detlefsen Real Estate
The Warren family signed an exclusive real estate listing agreement with Detlefsen real estate brokerage to sell their property. The agreement provided that the Warren’s were obligated to pay a commission of 5% of the sales price if they sell the property to any person during the term of the exclusive listing agreement. The term of the agreement was six months long running from January 1 of the year through June 30th. Detlefsen marketed the property and secured several offers with the highest offer being $700,000 from Ivy Jones which the Warren’s agreed to on May 30th of that year. This sales contract had a provision that in the event of default by the Warren’s Ivy Jones only recourse would be a refund of her $10,000 deposit.
Subsequently, a friend of the Warren’s, Zaine Johnson a person unknown to Detlefsen, found out the Warrens were selling the property and offered to buy it for $800,000. The Warren’s thus, subsequently cancelled the sales contract to Ivy Jones and returned her $10,000. They then waited until July 1, after the term of their exclusive contract with Detlefsen had lapsed and signed a written agreement to see the property to Zaine Johnson. Does the Warren family owe any brokers fee to Detlefsen for the sale of the property? Why or why not? If a fee is owed what should it be based on the $700,000 sales price or the $800,000 sales price? Discuss.
The Warren family signed an exclusive listing agreement with Detlefsen real estate brokerage, which granted the brokerage an exclusive right to sell their property for a period of six months. According to the terms of the agreement, the Warrens were obligated to pay a commission of 5% of the sales price if they sell the property to any person during the term of the exclusive listing agreement.
Detlefsen real estate brokerage secured several offers, and the Warren’s accepted the highest offer of $700,000 from Ivy Jones. However, the Warren’s later canceled the sales contract with Ivy Jones and entered into a new agreement to sell the property to Zaine Johnson after the term of the exclusive listing agreement had expired.
Whether or not the Warren family owes any brokers fee to Detlefsen for the sale of the property would depend on the terms of the exclusive listing agreement. If the agreement contains a protection period clause, which is common in real estate listing agreements, it would require the Warren family to pay Detlefsen a commission if the property is sold to a buyer introduced to the property during the term of the exclusive listing agreement, even if the sale takes place after the expiration of the agreement.
