Posted By Larry Tolchinsky on February 2, 2016
As we all know, real estate agents are in the business of bringing buyers and sellers together for the purpose of getting a home sold. Real estate agents are an important cog in the the real estate machine and are vital to keeping our economy growing.
Requirements To Sell Florida Real Estate
In Florida, the real estate market brings in millions of dollars of revenue into the state’s economy annually. This year alone (2016), real estate experts are predicting a rise in existing home sales of 5 – 10% due to people moving to the Sunshine State as well as a steady increase in the number of jobs that are being created here in a wide rage of industries.
Since real estate is such a vital sector of our state economy, and for consumer protection reasons, Florida real estate agents are required to be licensed by the State of Florida. Licensing insures that these professionals meet minimum educational and experience requirements before they can be trusted with the duties involved in this line of work (agents and brokers must take a lengthy class and then pass a test before they become a licensed professional). In addition to initial licensing requirements, real estate agents and brokers also have to maintain their licensing eligibility. Each Florida real estate agent and broker must take steps to remain in good standing with the Florida Department of Business and Professional Regulation (”DBPR”) on an annual basis (through continuing education, dues and fees, etc.).
Written Real Estate Agent Agreements
Florida agents are required to adhere to certain behavior in the course of their work. For example, agents must have a written agreement in place with a seller before the agent can list the property for sale on the MLS. Requiring a written agreement helps to avoid issues between the parties, including how long is the listing, when can you terminate the agreement, and how much is the real estate agent going to be paid for his or her services.
This agreement (a/k/a the “Listing Agreement”) between the real estate professional and the seller also contains other important terms which are required under our rules and regulations. For details on the different types of real estate agent contracts, read our earlier post, “Listing Agreements: Are All Florida Real Estate Broker Contracts The Same?.”
The Main Goal For The Seller’s Real Estate Agent
The reason most seller’s engage a real estate agent is to get their home sold timely and at a market price. The agent is able to accomplish these goals because they know the market. That’s their job. They know prevailing prices and they know how long it takes to sell a home. Once an real estate agent does his or her job, then they earn a commission, which is normally a percentage of the sales price (the commission is an essential term of any listing agreement).
Is The Buyer Ready, Willing, And Able?
Simply stated, real estate agents need to find buyers to get paid for their services. But not just any buyer will do.
The seller’s agent is on the lookout for a “ready, willing, and able” buyer. Yes, this is a term used in the real estate industry and it has legal significance. See, McAllister Hotel, Inc. v. Porte, 98 So.2d 781 (Fla. 1957). Consider these scenarios;
- A young couple touring an expensive oceanfront condo that does not have the financial resources to close a transaction does not meet the criteria as a ready, willing, and able buyer; or
- A doctor with a thriving practice who is interested in a golf course community but he’s too young to meet the criteria to live in the community because it’s a 55-years and older condominium is not a ready, willing and able buyer.
Of course, there are times when finding just-the-right buyer can be difficult, especially when the economy is slowing or stalled. Which means, some agents will be tempted to fudge things to try and get a buyer in the door so they can get paid, including working without a written listing agreement.
The Case of the Real Estate Broker v. The Executor And An Unpaid Commission
In the case of Cammack v. Leonhardt, 302 So. 2d 170 (Fla. Dist. Ct. App. 1974), the real estate broker filed suit.
The seller, Arthur Leonhardt, Jr., was sued by a Florida real estate broker, Margaret Cammack, where the real estate broker demanded that the seller pay a commission to her under the terms of their agreement. After the trial court ruled against the broker, the broker appealed the case to the reviewing court.
There, the appellate court held that the case needed to be sent back to the lower court for the trier of fact to decide if there was an agreement between the seller and the broker, and to decide if the broker found a ready, willing, and able buyer. If so, then the broker needed to be paid for her services.
Here’s what happened. Arthur Leonhardt, Jr., was the executor of the Estate of Ethyl Crawford, which owned a piece of real estate. Margaret testified that she and Arthur discussed the terms of a listing agreement and the terms under which the property was to be sold.
However, nothing was put in writing. They did have a discussion but there was no formal, written listing agreement between them for the sale of the property.
Some time went by, and then Arthur told Margaret to stop trying to sell the property: “proceed no further.” (This happens all of the time; real estate professionals understand that things change, sometimes the seller changes their mind.) Problem was, Margaret had found some ready, willing, and able prospects who were prepared to buy the property on the terms and conditions set by the seller.
If Arthur didn’t want to sell the property, that was okay. However, Margaret still wanted the commission for finding a buyer.
The seller refused. He denied there was a deal between them — no listing agreement, oral or written. Talking about a deal isn’t the same as having one, he argued. And even if there was one, he argued that the buyer that was presented by Margaret to Arthur didn’t meet the “ready, willing, and able” buyer test.
It was a case of he said, she said since there was nothing in writing. The reviewing court returned the case to the courtroom to determine if they reached a deal because if they had a deal and if “… the broker produces, in good faith, a purchaser who is ready, willing, and able to purchase upon the terms and conditions specified,” then a commission would be due.
What Should You Do If There Is A Conflict Between The Seller and The Real Estate Agent?
If you have a disagreement or there is some confusion between you, as a seller, and your real estate agent or broker, then you should know your rights and know the different issues that can be at play. When is an agent entitled to a commission? Can an agreement be terminated without penalty? Does the real estate professional receive a commission for just finding a ready, willing and able buyer? The answers to these questions depend on if the parties had an agreement (written or oral) in the first place and if the terms of the agreement are known and can be proven.
Filing a complaint with the agency that oversees the real estate industry is one thing; it’s usually one of the first things that comes to mind. However, complaints to the Florida DBPR will not get some the justice they desire. Those people will need court intervention to find justice.
A good piece of advice is to at least speak with an experienced Florida real estate lawyer to learn about your rights. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.
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