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Web Articles
             Listing or Commission Agreements

If the Florida real estate broker does not have a valid listing or
commission agreement with one of the parties involved in a
transaction or if their listing or commission agreement has
expired, the legal doctrine of the “Procuring Cause” provides
the broker with some protection if they claim a commission in
regards to a sale or lease of real estate.  But while there are
some protections for the real estate broker in this situation, the
broker is certainly in a much stronger legal position and the
property owner has more certainty as to their rights and duties if
they have a valid and binding written agreement.  Verbal listing
or commission agreements are enforceable, within certain
limitations, but written agreements are preferable because the
problem of proving the terms of a verbal agreement is
eliminated.  

A listing or commission agreement is a contract therefore basic
contract requirements that apply to all contracts in Florida also
apply to listing or commission agreements.  The contracting
parties must be of legal capacity to enter into a contract.  There
must be an offer and an acceptance and the parties must be in
agreement as to the contract terms.  

But beyond these basic requirements for all contracts in Florida
there are certain terms and provisions that are specific to listing
or commission agreements, which should be considered.  
Probably the most important provisions within a listing or
commission agreement would be those that are related to the
amount of the commission and the terms associated with
payment of the commission.  A commission can be either a set
amount or it can be described by the formula to be utilized to
calculate the commission.  If a listing or commission agreement
is silent as to the amount of the commission or the formula
which should be utilized to calculate it, then the commission will
be deemed to be a reasonable amount which is based upon
customary and locally prevailing terms.  Obviously what is
considered reasonable by the person who is to receive the
commission may be very different from what is considered
reasonable by the person who must pay the commission.  And
equally obvious is the difficulty and likely expense that could be
necessary to argue what are “customary and locally prevailing
terms” for real estate commissions.  But in addition to specifying
the amount of the commission, specifying
when a commission is
earned must also be explicitly described in the listing and
commission agreement and there are
other terms related to the
commission that should also be addressed in the listing or
commission agreement.

There are, however,
other important terms and provisions within
a listing or commission agreement that do not pertain to the
commission which should also be considered.

It is also good practice for a listing or commission agreement to
have an explicit expiration date or event that signifies the
expiration of the agreement so that it does not potentially
continue indefinitely.  
The expiration of the listing or commission
agreement and the rights of the parties following the expiration
of the agreement should be clearly described to avoid potential
problems, issues, and conflict.

But in the event of conflict, both the real estate broker and the
property owner should be aware of the impact of certain terms
on the
ability of the broker to lien the property to secure their
commission.

And finally, there are certain categories of listing or commission
agreements which have been and continue to be prevalent
within the real estate industry and there are specific duties and
obligations associated with each of these types of listing or
commission agreements.  Both real estate brokers and property
owners must be aware of the rights, duties, and obligations that
have become associated with each of these
types of listing or
commission agreements through practice, use, and legal
precedence.

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Craig W. Little, P.A.