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Island Realty v. Bibbo

329 N.J. Super. 528, 748 A.2d 620 (App. Div. 2000)

BROKERS; LISTING AGREEMENTS—Absent a specific provision to the contrary, an owner who has signed a listing agreement may withdraw its property from the market before a buyer is produced and is liable only for contract or quantum meruit damages, not for loss of the full sales commission.

A homeowner signed an exclusive listing agreement. About three months later, the homeowner orally communicated her decision to the real estate broker to remove the house from the market. She confirmed that decision in writing the following day. A few days later, the real estate broker sent an unsigned agreement of sale to the homeowner. The homeowner did not consummate the sale and she rejected the real estate broker’s demands for a commission for having produced a buyer. The lower court noted that “the listing agreement does not address the issue of termination in the event that the seller, as is purported [sic] occurred here, has a change of heart.” Nonetheless, for purposes of the motion before the lower court, the judge assumed that the listing agreement was in effect. He rejected the real estate broker’s claim because, although the offer was for the full price, the initial deposit and the additional deposit had not been paid, and the offer had not been signed by the prospective buyer. Consequently, the lower court found there was not a ready, willing, and able buyer making a bona fide offer, and therefore the right to receive a commission never accrued. The Appellate Division agreed. Furthermore, “an owner of real property who has signed a listing agreement retains the right to withdraw the property from the market before a buyer is produced; subject, of course, to every contracting party’s obligations to deal fairly and in good faith.” “Where the property has been withdrawn from the market before the broker’s efforts have produced a buyer who stands ready to consummate the transaction, the owner is responsible to the broker only for such damages as may be established for breach of contract or on a quantum meruit basis for special services rendered in connection with reasonable efforts to sell the property, undertaken before it was withdrawn from the market.” Ordinary expenses are not recoverable; they are the cost of doing business. According to the Court, these principles are in keeping with the general rule that, in the absence of bad faith or special circumstances, the owner is not liable for the full commission unless a sale actually occurs. Inasmuch as the real estate broker never asserted that it had incurred damages from the homeowner’s alleged breach of contract, apart from the loss of the full sales commission, it was proper for the lower court to dismiss the real estate broker’s suit against the homeowner.


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