Daily Development for
Friday, March 21, 1997

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

BROKERS; COMMISSION: Real estate broker is entitled to commission provided for in exclusive listing agreement where seller and buyer reach agreement prior to expiration of listing agreement but delay execution of documents until after expiration for purpose of avoiding broker's commission.

Nicholson v. Myers, 931 S.W.2d 183 (Mo. App. 1996).

Not a surprising result, but another good one for your precedent files.

This was an exclusive listing agreement not requiring that the broker be a "procuring cause." The court found that the parties had reached substantial agreement but deliberately deferred signing the contract until after the listing period had expired, even stipulating that the earnest money check could not be dated prior to the expiration date.

Reporter's Comment: This result came despite the facts that (i) the exclusive listing agreement provided for a commission due upon the sale of the property during the term thereof, not the execution of an agreement of purchase and sale, and (ii) the major precedential case relied upon by the court concerned delay of execution of a deed, not of execution of an agreement of purchase and sale. The trial court had held that, even considering the parties' collusion to delay execution of such agreement, the property did not sell prior to the expiration of term of the listing agreement, thereby depriving the broker of any right to the commission. Listing agreements often provide that if an agreement of purchase and sale has been executed, the term of the listing agreement shall be extended until the closing of the sale. Did the trial court, having more complete evidence, find that the broker's failure to negotiate such a provision in the instant listing agreement evidence the broker's agreement that there would be no commission if there was no closing during the listing term, regardless of when the agreement was signed?

Editor's Comment 1: In response to the Reporter's comment, the editor notes that in his experience most listing agreements contemplate that the commission is payable if there is a contract with a "ready, willing and able" buyer during the listing period, regardless of when the closing occurs. The term "sale" can mean, variously, the making of a deal, the execution of a contract, or the closing of a deal. Although it is likely the language was drafted by the broker, courts still ought to interpret the language in light of the overall purpose of the contract and common understanding of the relationship. Language like that referenced by the Reporter, providing for extension of the listing agreement until sale, is useful as boiler plate, but its absence should not be dispositive of the parties' intent to depart from the more established custom.

Editor's Comment 2: There is Missouri authority for damages for tortious conspiracy to interfere with a broker's listing contract in cases not too far removed from this one. In such cases, a lawyer who plays a role in carrying out the parties' plan also would be a part of the conspiracy and liable in tort. The parties here may have been fortunate in having liability only for the commission and attornies' fees. Note that, after appealing the decision, their counsel did not file a brief? Did we see another "delaying" strategy?

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