Real Estate Contracts: Exclusive Right to Sell
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What is an "Exclusive Right to Sell" Provision in a Real Estate Contract?
An "Exclusive Right to Sell" provision allows a broker to have exclusive rights in the sale and commission of a particular house. The purpose behind this provision is to prevent homeowners from changing brokers or agencies, while their current broker is still working to sell the house. In most cases, violation of an "exclusive right to sell" provision entitles the original broker to his expected commissions from the sale.
Does an "Exclusive Right to Sell" Provision Apply if the Homeowner Sells the House Themselves?
Although it would appear so, many courts actually exclude homeowner sales from an "exclusive right to sell" provision. So even if the contract has the provision, a homeowner is still allowed to sell the house themselves without having to pay a broker for any lost commissions. In many cases, it is up to the broker to prove that the contract excluded the homeowner from selling the house themselves.
How Does a Broker Prove that "Exclusive Right to Sell" also Precludes the Homeowner?
It is emphasized that the words "exclusive right to sell" alone do NOT indicate that the provision also applies to the homeowner. Although courts vary in terms of what exact words they feel make a homeowner liable for sale of the house, two common themes are:
- The contract clearly says that the homeowner cannot sell the property: For example, "The "Exclusive Right to Sell" provision also applies to the Homeowner. One should consult their own state laws to determine what language courts in the area typically prefer.
- The contract awards commission to the broker, regardless of who sells the house: This is generally seen as a protective measure by brokers in case they aren't the ones who make the sale. Therefore, most courts will assume that homeowners are included in an "exclusive right to sell" provision.
How Can a Lawyer Help Me?
If you are a broker, a real estate attorney is essential for protecting your sale of property. A lawyer can help you include a foolproof "exclusive right to sell" provision in your real estate contracts, as well as protect your rights in case one of your customers has already violated such a provision.
If you are a homeowner looking to sell your property, a real estate attorney can oversee any broker contracts, helping you to understand your particular rights and obligations in the process. If there are any problems, an attorney can defend your rights against the broker.
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Last Modified: 09-07-2012 04:49 PM PDT
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