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Questions on Exclusive Right to Sell Laws

An exclusive right to sell listing is a contract that gives the broker exclusive rights to represent the owner of the property being sold, either directly or through another broker. The owner is liable to pay broker fees for both the listing as well as the selling. If the property is sold before the date of expiry of the listing contract, the seller must pay the brokerage a commission irrespective of whether the property was sold by the broker or the owner. Also, the owner may not list the property with any other broker till the expiry of the contract. Listed below are some of the top questions on laws related to the exclusive right to sell answered by Legal Experts.

On a property listed as an Exclusive Right to Sell, is the owner obliged to sell if the broker obtains a full price offer? And, if the property is taken off the market, is the broker still owed commission?

The owner’s obligation on the commission would depend on the provisions of the Right to Sell listing agreement entered with the broker. If the agreement so provides, you would have to pay the broker a commission on a full price offer. However, you are under no obligation to sell your property whether or not a full price offer has been made.

The 'Exclusive Right to Sell Contract’ with a seller agency expires in one year. However, I no longer wish to sell. How may I notify the broker?

You may simply write to the broker stating that you no longer wish to sell your property and terminate the contract. The contract, or agreement, you have signed with the broker may include this provision. Even if the contract does not provide such a clause, you are not obliged to sell your property unless you wish to and may, therefore, end the contract at your will.

A buyer was brought to me by the agent during our four month Exclusive Right to Sell contract period. However, I changed my mind about selling the house. The same buyer contacted me directly after five months of the contract’s protection period expiring. Am I obligated to pay the agent any fees?

If the buyer returned to you after the “protection period” had expired, you would have no obligation to pay commission to the agent.

The Exclusive Right to Sell (ERS) agreement with my agent expires in one month and has a six-month protection period. Since the house was not selling, I contacted a Property Management Company (PMC) to rent the house. If someone rents the house during the ERS agreement/protection period, but buys the property only on expiry of such a period, would I still owe commission to both the ERS agent as well as the PMC?

If the house is bought after the expiry and the protection period of the Exclusive Right to Sell agreement, it is likely that you will have no obligation to pay the agent. In this particular case, the person wanting to buy the house was brought as a tenant during the ERS period, and is buying the house only after the expiry of the ERS protection period. To put it more clearly, unless the house is sold during the period of both contracts, you should have no obligation to pay two commissions. However, if the judge finds that you acted in bad faith and deliberately prevented the agent’s commission, you may have some liability.

We have an Exclusive Right to Sell contract with an agent who has not shown much interest in selling our property in the past four months. The only offer we had was $40,000 lower than the expected price. What’s our course of action?

You may send a written letter annulling the contract based on non-performance and breach of contract. You are not obliged to accept an offer lower than the stipulated price of the house. Also, your agent will have no rights to recover commission on the basis of the low offer.

The duration of an Exclusive Right to Sell agreement is negotiable. Typically, agents would include a protection period of six months post expiry of the contract to prevent property buyers from contacting the owner directly and to ensure that they are paid commission for their efforts. However, the obligations of both the owner and the agent would depend on the wording of the agreement. To know more about such an agreement, write to Legal Experts.
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