Daily Development for Tuesday, July 27, 1999
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
BROKERS; COMMISSION; "READY, WILLING AND ABLE:" A real estate broker delivers a "ready willing and able" buyer and is entitled to a commission even when the buyer's offer is embodied in a letter of intent that would not, upon acceptance, lead to a binding contract, if the seller interferes with the making of a final contract by refusing to accept the letter of intent.
East Kendall Investments, Inc. v. Bankers Real Estate Partners, 1999 WL 30638 (Fla. 3d DCA 1999)
A real estate broker brought an action against the seller of an apartment building with whom the broker had an exclusive listing agreement alleging that the broker was entitled to its commission because the broker had found a ready, willing, and able purchaser. The broker had delivered an able buyer who first offerred a lower price, but later raised his offer to the full asking price of $3, 950,000. The seller verbally accepted this offer, but later refused to execute a contract at that price, and demanded $3,995,000. Buyer agreed to that price, but ultimately seller refused to execute any agreement.
Seller defended the action on the grounds that all offers presented were in the form of letters of intent. Had the seller actually accepted any of these offers, there would not have been a binding contract.
The court rejected this defense. The absence of a binding purchase contract does not preclude the broker from recovering its real estate commission when the evidence shows that the vendor was responsible for the failure to consummate the sale during the listing period. The presence of an offer demonstrates that the buyer is ready and willing. If offer is at full price, and the seller refuses to proceed to negotiate and execute the contract, this does not preclude the broker from receiving a commission if the broker can show that the buyer was able to perform.
Comment 1: Note that if the parties had proceeded to negotiate, and they later could not agree on the terms of a contract, there would have been no commission. It may seem odd that the buyer's offer is held to trigger a commission when we don't know whether the seller and buyer really could have worked out a final agreement. But where the seller's actions preclude our finding that out, the seller is responsible for the commission.
Comment 2: The case demonstrates the risk of fishing for "overbids." Once a valid full price bid is on the table, as here, the seller risks a commission obligation even if it appears that the seller actually can sell for more. If, indeed the seller completes a sale for more to a party produced by the broker, the seller pays the higher commission and everyone is happy. But where the seller is inclined to attempt to market for higher than the listing price, the seller had better be certain that the broker is willing to go along, It might even be wise to get a waiver of a commission claim based upon the full price bid, at least where the numbers, as here, put a lot of zeroes on that commission check.
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