Written by Michelle Oliveira
It’s common knowledge to solidify contract terms or deals in writing. In fact, there is a doctrine called the Statute of Frauds which requires that certain contracts be in writing. However, in some cases and jurisdictions, particularly in Real Estate, a written agreement – or lack thereof – does not make the deal void. In certain cases, the deal may remain. If you are in a situation where there is no written brokerage agreement, let’s dive into this matter further to better understand how these agreements can be enforceable despite not having it in writing.
Enforcing Real Estate Agreements
In Real Estate, a brokerage contract is an agreement between a real estate broker and a property owner to list and market the property for sale. These contracts are typically written agreements that outline the terms and conditions of the agreement, including the commission rate and the duration of the contract. However, it is important to note that a brokerage contract does not necessarily need to be in writing to be enforceable. Instead, a contract can be created through an oral agreement. This means that if a property owner and a real estate broker agree to work together verbally, a binding contract can be created.
For a verbal brokerage contract to be enforceable, there must be evidence that the parties entered into an agreement. This evidence can include witness testimony, emails, text messages, or any other communication that demonstrates the existence of the agreement. Additionally, the terms of the agreement must be clear and unambiguous, and both parties must have agreed to the terms.
The Case Huang et. al. v. Ma et. al
In the case of Huang et. al. v. Ma et. al, (Lawyer’s Weekly No. 10-009-23), a Real Estate broker relied on the promise of her clients that she would be their exclusive agent for the purchase of their home.
The broker spent months with the buyers looking for homes. However, the buyers ended up finding a home themselves and neglected to tell the listing agent of the property they purchased that they were working with a broker. As a result, the broker did not receive a commission on the purchase. After closing on the home, the buyers sent a termination e-mail to the Broker.
The court held that a real estate brokerage contract need not be in writing to be enforceable. In referencing the Statute of Frauds, the Court stated that it “shall not apply to a contract to pay compensation for professional services of. . . a licensed real estate broker or real estate salesman acting in their professional capacity.” While it is always a good idea to get things in writing, the Plaintiff’s failure to get her brokerage agreement in writing was not a fatal error.
What to Do if A Dispute Arises
Enforcing a verbal brokerage contract can be more challenging than enforcing a written contract because there is no physical document to refer to. However, it is still possible to enforce a verbal contract through legal action. In some cases, the parties may be able to work out a resolution without the need for litigation. However, if a dispute arises, a court may be required to determine the validity of the contract and the appropriate remedy.
It is important for property owners and real estate brokers to understand the legal requirements for creating a binding brokerage contract, whether it is in writing or verbal. By understanding these requirements, parties can ensure that they are entering into a valid agreement and can avoid potential legal disputes.
If you have any questions regarding a contract, we recommend having it looked at by an attorney. Our legal team is experienced at reviewing contracts to ensure that you are protected. If you have any questions regarding a broker agreement or other legal document, please contact Attorney Michelle Bessette Oliveira at moliveira@pkboston.com or (508) 807-1131 for a consultation.
The above information is designed to provide a helpful overview of a relevant topic. It does not constitute legal advice nor should it be construed as such. Please do not take action based on the above information without seeking formal legal advice.
