Listing Property for Sale on Company Website (and Doing Nothing Else) Enough to Bag Commission

June 13, 2007 | Roger McEowen

 

One of the fundamental principles of contract law is to read the contract and understand what the contract provisions mean before signing the contract. That was certainly true in this case involving the sale of a ranch in southeast Kansas. The owners signed a non-exclusive right-to-sell agreement with a realtor. The contract provided that the realtor could list and sell the property for $1,500,000 during a 5-month period in 2004 for a 5 percent commission. A prospective buyer in Florida noticed the ranch on the realtor’s corporate website and called the realtor. The buyer came to Kansas. Although the realtor didn’t come to the ranch with the buyer, he did give the buyer directions to the ranch and called the sellers to tell them that a prospective buyer was staying at a local hotel. The sellers contacted the buyers and showed them around the ranch. The sellers drew up a contract for sale which the buyer signed. The sellers then called the realtor to inform him of the sale. The transaction was part of a tax-free exchange by both the sellers and the buyer, so closing on the ranch did not occur until early 2005. The realtor requested his 5 percent commission ($75,000), but the sellers refused. The realtor’s company moved for summary judgment, and the trial court agreed and declined the sellers request to alter or amend the judgment. The sellers appealed.

The Kansas Court of Appeals upheld the award of summary judgment for the realtor. While the seller retained the right to personally sell his ranch, the court determined that the realtor actually was the party that “found” the buyer.  But for the realtor’s website, the buyer would not have found the sellers’ ranch, the court reasoned. As such, it was the realtor that procured the buyer. Thus, even though the sellers showed the ranch to the buyer and wrote the contract for sale, the buyer was sent to them by the realtor. Under Kansas case law, that’s all it takes to entitle a realtor to a commission unless the brokerage contract specifies otherwise - and this contract did not. The court also ruled that the brokerage contract did notrequire the contract to close within the 5-month period in 2004 specified in the contract for the realtor to be entitled to the commission. The contract language required only an “agreement to sell or exchange” be entered into within 90 days after the 5-month period expired, and did not require the sale of the property to close within that timeframe. The court also stated that it was an unreasonable construction of the contract language to construe it to mean that the broker agreed to waive the commission if the sale involved a tax-free exchange. Antrim, Piper, Wenger, Inc. v. LoweNo. 97,308, 2007 Kan. App. LEXIS 609 (Kan.Ct. App. Jun. 8, 2007).