How to Deal With Seller Delays With Respect to Commissions
Q: What if my seller delays the closing beyond the termination date of our listing agreement just to avoid paying me my commission?
First, you should make sure your listing agreement expressly protects your commission in the event the sale doesn’t close until after the listing agreement has terminated.
Assuming your agreement has no such provision, whether or not you receive a commission will likely turn on whether you were the procuring cause in bringing the buyer and the seller together.
In Florida, you’re considered the procuring cause of a sale if you have (1) brought the buyer and the seller together, and (2) effected a sale through continuous negotiations which you’ve initiated – which means that you’ve remained involved in the deal. In such a case, you should be entitled to your commission, even if the ultimate terms of the deal – including the price term – differ from what’s contained in the listing agreement.
As to the “bringing the buyer and seller together” side of that equation, you’ll need to show that you’ve taken any affirmative steps to bring the buyer and seller together, which could include placing signs on the property, promoting calls from prospective buyers, or showing the property to prospective buyers.
In terms of “continuous negotiations”, Florida courts will grant an exception, if the buyer and the seller intentionally exclude you from their negotiations.
On the other hand, Florida courts may find that brokers who don’t contact their sellers for extended periods of time, have abandoned their listing agreements. This is particularly true in the case of agreements that don’t provide a time in which the broker’s services are to be performed.
Getting back to the issue of a seller who intentionally delays a closing just to avoid paying a commission, the general rule is that the courts won’t allow a broker to be cheated out of a commission through fraud or inequitable conduct by the seller, and that a broker who is the procuring cause will be entitled to a commission.
Whenever possible, another good way to protect your interests is to enter into an exclusive right of sale contract, in which the broker is entitled to be paid a commission on any sale, irrespective of who is ultimately deemed the procuring cause of the sale. The Florida courts have held that a broker who is, in fact, the procuring cause, under an exclusive right of sale contract, will be entitled to a commission even if the sale doesn’t close until after the listing agreement has expired.