Seller Changes Mind, But Still Must Pay

A broker prevails in a commission case involving an $8.5 million cattle ranch.

August 1, 2010

A Michigan property owner who changed his mind about selling a parcel of land after signing a contract with a buyer was required to proceed with the sale and pay commission to the broker.

In the case, Clancy, REALTORS®, v. Rubick, the seller owned 179 acres of mostly undeveloped land. A neighbor submitted an offer to buy nearly 90 acres, and the seller accepted the offer. A closing was scheduled, with the seller’s brokerage acting as a dual agent. But the seller changed his mind after his wife said she would leave him if the deal went through. She also claimed dower rights to the property and made clear that she would not consent to a sale. The seller did not attend the closing.

In the meantime, the brokerage continued to list the remaining property, and a set of buyers came forward with a full-price offer, even though the owner no longer wanted to sell.

The brokerage filed a lawsuit seeking commission from both of the transactions, including the one that did not close, with the argument that it had procured a ready, able, and willing buyer—as is required for commission under Michigan law. The neighbor also filed a lawsuit seeking performance of the purchase agreement.

The trial court decided the sale to the neighbor must go through and the brokerage must be paid commission on that deal. However, the court rejected the brokerage’s claim to the commission on the offer for the remaining property.

Both the brokerage and the seller appealed the rulings. The seller argued that the brokerage had inadequately disclosed its dual agency status and thus was not entitled to a commission, and that the neighbor was not entitled to take ownership because the seller’s wife didn’t sign the agreement.

The Michigan Court of Appeals affirmed the trial court, saying that the brokerage had obtained written consent for the dual agency relationship. The court also said cited earlier rulings that didn’t require the wife to release her dower rights for property to change hands. The court dismissed the broker’s claim to the second commission on the grounds that the offer was made after the seller told the brokerage the property was no longer for sale.

Robert Freedman

Robert Freedman is the former director of multimedia communications at NAR.