Last Update: 02/24/17
Once you finally make the decision to sell your Florida home, (whether it’s a Miami oceanfront condo, a single family dwelling in a quiet neighborhood or a duplex, townhouse, or other type of house), you need to let world know by advertising it for sale, in both the local housing market and beyond, with the hope of finding the right buyer. Usually, this means working with a Florida real estate agent and a Florida real estate broker. During the sale process, you’ll be dealing with several legal contracts, including the documents you sign with the buyer — like the sales contract and the transfer documents (Deed, Bill of Sale, Closing Statement, etc..). However, the first real estate contract you will be signing, usually, is the listing agreement with the Florida real estate professional who will be selling your home for you.
Florida Real Estate Listing Agreements: The Contract with Your Florida Real Estate Agent
As we all know, in Florida when you sign a contract with a real estate broker (many of these brokers work for national brands, with some offices being locally owned and operated) a particular real estate agent will be assigned to work on your property sale. Using the industry lingo, once you “list” your home with the real estate company you agree to have the agent market your home for sale in exchange for a real estate commission.
However, not all listing agreements or provisions therein are the same. In South Florida, for example, home sellers may sign, among others, (1) open listing contracts, where the seller will pay a commission only if the agent brings an acceptable offer – the seller also tries to find a buyer too (and if the seller does find a buyer, no commission is due to the agent); or (2) exclusive right to sell listing contracts, which is the most common kind of listing agreement in Florida, where the listing agent has total responsibility for finding a buyer for the home for a set period of time (e.g., 90 days).
Are Florida Listing Agreements Governed by Florida Contract Law?
Once a home owner signs a listing agreement, he or she has entered into a binding contract with the real estate agent and the Seller cannot unilaterally decide to back out or cancel the deal unless the contract allows for it. In contract terms, there needs to be a “right of rescission” in the contract, which gives details on how to notify the broker or agent on the seller’s decision to cancel the listing as well as time constraints, the cost for cancelling, etc. If the home owner is dissatisfied with the real estate agent or broker, then he or she will have to look to the contract terms for options.
What Happens If the Real Estate Agent Fails to Perform Its Duties? Can I Sue?
Whether or not the real estate agent or real estate broker is breaching the contract is a legal question; if they have, then the home owner and seller can sue for breach of contract damages.
However, in Florida listing agreements more often than not there will be a provision in the listing contract that overrides the usual practice of filing a breach of contract lawsuit down at the courthouse. In the agreement there will be a “Dispute Resolution” provision which likely says the parties will first attempt to resolve any claims or controversies by non-binding mediation. If mediation fails, then the parties are free to litigate their issues.
Additionally, the Dispute Resolution paragraph will also have an arbitration option within it. If that provision has been initialed, then the homeowner/seller has agreed to avoid litigation in a traditional manner and instead opted to have any disagreements or controversies decided in a binding alternative dispute resolution proceeding that is not a courtroom proceeding. Here, an “arbitrator” makes the call that a judge would normally make (the parties share the cost of the arbitrator, plus other costs, for this procedure).
Warning: Florida Listing Agreements Contain An Arbitration Clause
For example, the 2014 version of the Florida Association of Realtors’ Exclusive Right of Sell Listing Agreement contains the following arbitration clause in its paragraph 12:
Dispute Resolution: This Agreement will be construed under Florida law. All controversies, claims, and other matters in question between the parties arising out of or relating to this Agreement or the breach thereof will be settled by first attempting mediation under the rules of the American Mediation Association or other mediator agreed upon by the parties. If litigation arises out of this Agreement, the prevailing party will be entitled to recover
reasonable attorney’s fees and costs, unless the parties agree that disputes will be settled by arbitration as follows: Arbitration: By initialing in the space provided, Seller (____) (____), Sales Associate (____), and Broker (____) agree that disputes not resolved by mediation will be settled by neutral binding arbitration in the county in which the Property is located in accordance with the rules of the American Arbitration Association or other arbitrator agreed upon by the parties. Each party to any arbitration (or litigation to enforce the arbitration provision of this Agreement or an arbitration award) will pay its own fees, costs, and expenses, including attorney’s fees, and will equally split the arbitrator’s fees and administrative fees of arbitration.
Homeowners/sellers entering into listing agreements with real estate brokerage firms should be advised that it is sometimes cheaper and faster for both sides to opt for arbitration instead of the traditional courtroom litigation route. Florida home owners and sellers should also know that these “arbitration clauses” once signed are usually going to be held valid by a trial court judge and therefore cannot be canceled by a home owner/seller who learns to late that arbitration may not serve their best interests.
In fact, in some cases, homeowners are surprised to learn that the costs of arbitration turned out to be higher than if the controversy was brought before a Florida court of law for resolution. That’s why I always tell my clients to never sign any documents related to a real estate transaction before I have a chance to review them. Even a “simple” listing agreement can come back to bite them.
A good piece of advice if you are facing a dispute with your realtor is to 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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