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Phoenix Realty Group, Inc. v. Catlett

A-1117-98T5 (N.J. Super. App. Div. 2000) (Unpublished)

BROKERS; EXCLUSIVES—A broker under an exclusive listing agreement, as contrasted with an exclusive right to sell agreement, should always be aware that a seller might sell its property itself prior to the end of the agreement.

A real estate broker claimed that its agreement with a client was an “exclusive right to sell” agreement, which, according to the broker, gave it the exclusive right to sell a restaurant for a period of one year. The lower court, upon reviewing the agreement under the circumstances, held that it was not an “exclusive agreement,” but was merely a listing agreement. The Appellate Division agreed. Three months after entering into the agreement, the property owner decided to withdraw the restaurant from sale. Then, two months later, the owner sold the restaurant to an associate. Therefore, the broker claimed that the owner had breached the listing agreement by withdrawing the restaurant for sale prior to the end of the one year term. The parties cited two earlier cases. One, in which an owner terminated a six month exclusive right to sell agreement just ten days after the agreement was executed, resulted in an award for breach of contract damages rather than for the commission that would have been payable on a subsequent sale. The other case declined to follow the first case and found that the broker substantially performed its obligations under the agreement by “advertising and producing prospective purchasers,” and that the proper measure of damages was to “award [] the contractual commission predicated on the sales price obtained by the owners’ direct sale.” However, the Appellate Division found that both cases were distinguishable. Each of the cited cases dealt with “exclusive right to sell” agreements, where the expectations of the parties were quite different than those presented in this particular case. The Court viewed this agreement as an exclusive listing binding both parties for one year, subject to the owner’s sale of the property during that term. The broker should have known that it was always possible that the owner might sell the property prior to the termination of the listing. Consequently, because the record reflected that the broker performed no work and expended no funds in the interim period between the termination of the listing and the sale of the restaurant, there were no damages stemming from the owner’s premature withdrawal of the restaurant from the market.


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