Desperate times (Associates Only) (edit/delete)
An interesting week; your comments and observations are welcomed. This has yet to be resolved.
On or about November 12, 2007, Broker A listed a property on Montano Street owned by Seller S. The property was a 1± acre tract of land that had preliminary approval for subdivision into six residential building lots. On or about December 21, 2007, Broker A prepared a Purchase Agreement offer for Buyer B, a building contractor, which was finalized with the Seller S on December 28, 2007, with an anticipated closing date of February 1, 2008. An extension agreement signed on February 6, 2008, extended the closing date to February 18, 2008. On or about February 1, 2008, Buyer B called Broker A indicating that he may want to amend the Purchase Agreement adding another investor. Again on February 11, 2008, Buyer B called Broker A and suggested that his brother be added to the purchase agreement as an additional buyer and that his brother wanted Broker B to receive a 5% real estate commission from this transaction. Broker A explained to Buyer B that this might be inappropriate and unfair as Broker B had not participated in the sale, that all contingencies to the existing agreement had been removed and the closing was only one week away. Buyer B then suggested that if Broker A would reduce her commission on this transaction by 5%, Buyer B would allow her to list the homes to be built on the subject property.
On or about February 12, 2008, an Amendment No. 1 was prepared by Broker B and faxed to Broker A. The amendment indicated that Broker B was now Buyer B's broker. This amendment was signed Buyer B and Seller S on February 15th. During a telephone conversation between Broker A and Broker B on February 15, Broker B indicated that he was sorry for his intrusion into this transaction, that Buyer B's brother was a good client of his and that the brother wanted three quarters of the selling side commission of 5% rebated to him. Broker B also said that if this was not acceptable to Broker A, the brother suggested that he would terminate the existing purchase agreement and have Broker B prepare a new offer with the brother as the buyer. Broker B went on to say that he advised the brother that had he, Broker B, been the listing broker on this property, he would have gladly and readily shared the selling side of the commission with the brother, as the buyer. He also told the brother that he expected that Broker A would, similarly, be willing to do the same. Curiously, when that addendum was presented to Buyer B for his signature, Buyer B indicated to Broker A and to Broker A's qualifying broker that he was not expecting any rebate from the real estate commission payable on this transaction.
So as to assure that the transaction closed as previously agreed to between Buyer A and Seller S and after the conversation with Broker B, Broker A called and explained the situation to Seller S who expressed his support for Broker A's position but also indicated that his preference was for the transaction to close.
Accordingly, the transaction was scheduled to close on February 18, 2008, with Buyer B as the buyer. Seller S closed via mail with the documents returned to the title company on or about February 15th. Buyer B's closing was also attended by his brother. Buyer B, encouraged by his brother, adamantly refused to sign the closing statements unless there was a rebate back to Buyer B and a commission paid to Broker B. Reluctantly, Broker A agreed to have the closing statements changed in the manner demanded by Buyer B and his brother. Buyer B then signed the closing documents. On February 20th, Broker A presented a letter to the title company requesting that they hold the commission payments to the Realtors pending an arbitration between Broker A and Broker B. Apparently, this information was relayed to Buyer B and his brother causing Buyer B to return to the title company on February 21st and attempt to rescind the closing. Buyer B instructed the title company to terminate the sale. The officers of the title company explained to him that this could not be done as the closing was completed. Unfortunately, the cashiers check from Buyer B had not yet been deposited by the title company so Buyer B went to his bank and stopped payment on the check. Later that day in a conversation between Broker A and Broker B's qualifying broker, it was agreed that Broker A would provide a letter to Broker B's office stating that Broker A would not request arbitration with the local association of Realtors. With that agreement in place, Broker B's qualifying broker assured Broker A that she would "make the deal happen."
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