Brokers Beware: Violated Sales Agreement May Lead to Lawsuit

A home is the most valuable asset most people will ever buy or sell, surpassed only, in some cases, by the sale or purchase of commercial real estate.

With the financial stakes of these transactions so high, it’s not surprising that approximately 9 out of 10 homebuyers and home sellers enlist the help of a professional real estate broker, according to the National Association of Realtors. Most commercial real estate transactions also involve a broker.

When hiring a broker to assist with a property listing, the seller and the broker enter into a written contract. These agreements typically contain rules that both parties must follow and last for a specific amount of time.

A few different types of real estate listing agreements are common. The most common is an exclusive right-to-sell listing agreement. Under the terms of this agreement, the broker is the only one who can sell or lease the property, and the broker is entitled to receive a commission — even if the seller tries to cut the broker out by finding a buyer on their own.

Another common listing agreement is an exclusive agency listing. This agreement guarantees a brokerage agency exclusive rights to sell or lease the property, but it does not prevent the seller from finding a buyer or leaser on their own, in which case they would not be required to pay the brokerage agency a commission.

A third type of listing agreement is a non-exclusive broker agreement, wherein the seller hires as many brokers as he or she wants and pays a commission only to the broker who closes the deal.

Brokered real estate agreements put money in the pockets of agents and often result in a better outcome for the seller. However, when one party doesn’t hold up their end of the bargain, it can cost the other party. Morgan & Morgan’s Business Trial Group recently represented a client in a case that illustrates this point.

The lawsuit arose when brokerage firm Florida Outdoor Properties, Inc. (FOP) accused seller American Citrus Products Corporation (American Citrus) of breaching the terms of their exclusive right of sale agreement.

As part of the agreement American Citrus agreed to give FOP the exclusive right and authority to find a purchaser of the property. The agreement stipulated that American Citrus immediately refer to FOP all inquiries relative to the purchase or leasing of the property. FOP was promised compensation in the event of a sale, exchange, or transfer by the broker or any other person or entity, including American Citrus.

In violation of the exclusive right of sale agreement between the two parties, American Citrus sold the property to a buyer without involving FOP or paying the brokerage firm a commission or compensation.

FOP hired Morgan & Morgan attorneys Benjamin Webster and Damien Prosser to represent them in a breach of contract lawsuit against American Citrus. After a hard-fought trial, the jury awarded the plaintiff a $427,800 verdict. Our business litigation attorneys’ willingness to take cases to trial and not settle for less leads to excellent client results such as this.

If you are involved in a business dispute, we can help. Our awarded and experienced Business Trial Group attorneys represent organizations and individuals in many types of commercial disputes. Our attorneys handle business litigation on a contingency-fee basis, so you will not pay any legal fees unless and until we successfully obtain a recovery in your case.

The willingness of our business litigation attorneys to take cases to trial and not settle for less routinely results in excellent client results such as this.

If you are involved in a business dispute, we can help. Our awarded and experienced Business Trial Group attorneys represent organizations and individuals in many types of disputes. We can also create a foolproof sales agreement for brokers that protects their interests.

Learn more during a free case review.