Who Pays Commission When a Deal Doesn't Close

13 September 2018
Who Pays Commission When a Deal Doesn't Close

Making recent news is a Brokerage who is suing for commission from a Seller on a deal that did not close.

Agents work on commission but that does not mean that they work for free. For Sellers, when you sign a listing agreement it states that you owe a commission on the successful completion of your sale. What happens if the Seller accepts an offer and the sale does not complete and close? It depends. If the reason for not closing is the fault of the Seller, such as they change their mind or cannot deliver title, then the Seller is liable and can be sued by the agent for commission.

If the fault is because the Buyer changed their mind or they could not come up with the money, then the Seller is not liable for owing commissions to the agent.

Similarly, if a Buyer signs a Buyer Agency Agreement that states they may owe commission, then the Buyer is liable for payment if the reason that the sale did not complete is the Buyers fault.

My guess is that the Brokerage suing the Seller will lose; not only in Small Claims Court but in the Court of Public Opinion, because the Seller was always ready to close.

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