CAR released revised standard form listing agreements and other standard forms on Monday, April 29, 2013. The newly revised listing agreements will condition the listing broker’s entitlement to compensation on both the procurement of a buyer and completion of the transaction (unless the seller prevents completion). Adding the completion of the transaction as a new requirement may appear at first glance to limit a listing broker’s rights. However, when read in context with the entire contract, it may turn out to be business as usual for most listing agents.
CAR’s Standard Forms Advisory Committee (SFAC) decided to change the compensation provision of the listing agreements in response to a recent court decision (RealPro, Inc. v. Smith Residual Company, LLC (2012) 203 Cal.App.4th 1215). In RealPro, the court denied compensation to a buyer’s broker who presented an all-cash full price offer that the seller did not accept. Although the RealPro listing agreement was not a CAR form, the SFAC nevertheless decided to change the compensation language in CAR listing agreements to help ensure their enforceability. The revised listing agreements reflect the SFAC’s belief that listing brokers generally do not pursue a commission claim if a transaction is not completed nor do they want to facilitate a buyer’s broker lawsuit for commission against a seller who rejects a full-price offer. The revised listing agreements also preclude multiple claims for commission from buyers’ brokers when a seller receives multiple full price offers.