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Legally speaking: Do I have to release one of my listings?

By Lorie Garland, OAR Assistant Vice President of Legal Services

The OAR Legal Assistance Hotline receives an array of real estate-related legal questions — including license law issues, disclosure, contract law, ethics and commission problems, among others. In an effort to help you work within the law, our “Legally Speaking” series spotlights some of the timely questions that are being asked by REALTORS. The following involves whether you’re obligated to release a listing…

Q: Four months into a six month listing agreement my sellers have requested a release of the listing. The sellers have stated that they are happy with my work, as I had implemented an extensive marking plan and had many showings, but they have changed their mind about selling. I told the sellers that I would cease marketing the property and withdraw the listing from the MLS but I would not release them from their obligation to pay a commission if the property sells during the term stated in the listing agreement. The sellers are adamant about a full release which makes me doubt that they have changed their mind about selling. I suspect they want to sell to a friend who has expressed interest in the property. Do I have to release the listing? Can I agree to a release only if the sellers reimburse me for my marketing expenses?

A: If a seller tells the listing agent to no longer market the house and to remove the listing from the MLS, the listing agent must honor that request. However, the listing brokerage is not required to release the seller from his obligation to pay a commission if the property sells during the term of the listing agreement.

The listing agreement is a legally binding contract the terms of which can be altered by agreement of the parties, the seller and listing broker. When a seller asks for a release the listing broker can grant the request, grant the request if certain conditions are met or cease marketing the property but make clear to the seller that he will owe a commission if the property is sold during the term of the listing.

A condition to granting the release could be payment of the costs incurred to market the property. Once payment is received by the brokerage the listing termination agreement could be executed.

When the brokerage is not releasing the seller from the obligation to pay a commission if the property sells, this continuing commission obligation should be clearly stated in the agreement to no longer market the property. If the property does in fact sell, the seller would owe the listing brokerage the commission stated in the listing agreement. If the commission is not paid, the listing brokerage would have to turn to the courts to enforce the commission agreement.

Tags: legal, Legally Speaking