A real estate brokers compensation is specified in the listing agreement. Compensation is considered to be earned when the broker has accomplished the work for which he was hired, and it is due at closing. Most sales commissions are payable when the sale is consummated by delivery of the seller's deed. This provision is generally included in the listing agreement. The broker's compensation is earned when a completed sales contract has been ratified by a ready willing and able buyer and by the seller. So just for clarification purposes the compensation is earned at the time of a ratified contract and then payable at closing.
In order to be considered the procuring cause the real estate broker must have taken action that started or caused a chain of events that resulted in the sale. A broker that causes or completes an action without a promise or contract to be paid is termed a volunteer and has no legal claim for compensation. In order to collect a sales commission from a seller, the agent must be able to prove that the seller agreed to pay the broker a commission for the sale.
Keep in mind that once a seller accepts an offer from a ready, willing and able buyer, the seller is technically liable for the broker's commission regardless or not the buyer completes the purchase. A ready willing and able buyer is one who is prepared to buy on the seller's terms and is ready to take positive steps toward consummation of the transaction.
A broker who as produced a buyer ready willing and able to meet the listing terms is usually entitled to a commission if the transaction is not consummated for any of the following reasons:
- The owner changes their mind and refuses to sell.
- The owner's spouse refuses to sign the deed.
- The owner's title contains uncorrected defects
- The owner commits fraud during the transaction
- The owner insists on terms not in the listing, such as the right to restrict the use of the property
- The owner and the buyer agree to cancel the transaction.
Should you have any further questions about procuring cause I encourage you to seek the advise of a professional attorney licenced to practice law in the state of Virginia. This is article is not to be taken as any advise given upon the legal matters discussed.
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