Court Opinion

ID: 9725487
Source: CourtListenerOpinion
Date Created: 2023-08-26 11:49:38.11306+00
Date Added: 2024-06-11T18:25:15.607719
License: Public Domain

JUSTICE COOK, specially concurring: On July 25, 1990, the Armstrongs executed a listing agreement purporting to be a bilateral contract that gave RE/MAX the exclusive right to sell their property. Two weeks later, on August 8, the Armstrongs notified RE/MAX they were no longer interested in selling, and the parties executed a withdrawal agreement. A few days later, the Armstrongs showed the property to the Millers. The' Armstrongs reached a verbal agreement with the Millers, apparently in October, and on November 13, 1990, two days after the expiration of an extension period provided for in the withdrawal agreement, the sale was closed. A broker is entitled to a commission if the broker has an exclusive sale agreement with the owner and the property is sold by anyone during the life of the agreement. Wilson v. Middendorf, 248 Ill. App. 3d 870, 872, 619 N.E.2d 179, 180 (1993). A broker is also entitled to a commission if the owner acts in bad faith to cause the sale to occur after the life of the agreement. Restatement (Second) of Agency § 446, Comment e (1958); Bear Kaufman Realty, Inc. v. Spec Development, Inc., 268 Ill. App. 3d 898, 902-04, 645 N.E.2d 244, 247-48 (1994). Although the circumstances here are suspicious, there is no evidence that either RE/MAX or the Armstrongs dealt with the Millers prior to August 13, the effective date of the withdrawal agreement (the date the listing agreement was terminated). RE/MAX in fact dismissed its count II, which had alleged that the Armstrongs were guilty of fraud or bad faith. RE/MAX’s sole argument is that it is entitled to a commission by virtue of the language of the withdrawal agreement, which provides for a commission "[sjhould said property be sold or exchanged within 90 days from the effective date hereof, through any source.” That language is very unusual, because it seems to make the owner liable for a commission after the listing agreement has expired, even if the purchaser had absolutely no connection with the property during the term of the listing agreement. Extension agreements such as this are intended to protect the broker from a defrauding owner who waits until just after the expiration of the initial listing period before selling to a purchaser with whom the broker has previously conducted negotiations. D. Burke, Real Estate Brokers § 2.11, at 2:112 (2d ed. 1992). Extension agreements are discussed in a number of Illinois cases. The agreements in those cases require contact during the period of the listing agreement. See, e.g., Tom Brinkoetter & Co. v. Cresthaven Country Club, Inc., 118 Ill. App. 3d 554, 556, 559-60, 454 N.E.2d 1182, 1183, 1185-86 (1983) (purchaser with whom there were negotiations "during the term of this exclusive listing” (emphasis omitted)); Pilson v. Roush, 82 Ill. App. 3d 187, 188, 402 N.E.2d 906, 907 (1980) (person "with whom you have negotiated”); Kokinis v. Kotrich, 81 Ill. 2d 151, 155, 407 N.E.2d 43, 45 (1980) (purchaser to whom it was submitted or shown during the term of the agreement); Busch v. Eisin, 96 Ill. App. 3d 909, 910, 422 N.E.2d 135, 136 (1981) ("to a purchaser to whom it was offered during the period hereof’). The explanation here is apparently found in the original listing agreement, which also contained an extension clause, providing for a commission, "if, within 180 DAYS after the expiration of said term, a sale is made to any person to whom the property was shown, by anyone, including myself, during said term.” The withdrawal agreement indicates that it changes the listing agreement only "exactly as stated” in the withdrawal agreement. The 90-day extension period in the withdrawal agreement should accordingly be read to require that the purchaser be one "to whom the property was shown” during the term of the listing agreement. Any other interpretation of the withdrawal agreement {e.g., absolute liability intended as a penalty, absolute liability intended to eliminate broker’s need to present evidence) would raise serious questions of overreaching on the part of the draftor, RE /MAX. In the present case, there is no indication the property was shown to the Millers during the term of the listing agreement (July 25, 1990, to August 13, 1990), by either RE/MAX or the Armstrongs. Accordingly, RE/MAX was not entitled to a commission under the withdrawal agreement, and the trial court erred in entering summary judgment in its favor. It was not improper for the Armstrongs to show the property to new prospects after August 13. RE/MAX’s exclusive right to sell ended on August 13, when the listing agreement terminated. The Armstrongs argue that there could be no "sale” under the withdrawal agreement because there was no closing during the 90-day extension period. Different considerations apply to the term of the listing agreement (July 25, 1990, to August 13, 1990), and to the term of the extension agreement (August 13, 1990, to November 11, 1990). It is generally not necessary that a sale be closed during the term of a listing agreement; it is only necessary that the broker produce a purchaser who is ready, willing, and able to purchase the property on the prescribed terms. A broker may establish his right to a commission by a legally binding contract of sale. Hallmark & Johnson Properties, Ltd. v. Gadea, 218 Ill. App. 3d 921, 926-27, 578 N.E.2d 1180, 1184 (1991); Busch, 96 Ill. App. 3d at 911-13, 422 N.E.2d at 137-38. That might not be the case with an extension agreement like the present one, where the language regarding the entitlement to commission is so different from the listing agreement, especially if the extension agreement is read to make the owner absolutely liable for a commission on any sale. In my view, however, it is not necessary to address the Armstrongs’ argument that a closing was required. I disagree with the majority’s statement that the language of the listing agreement requires that a sale be in writing. The listing agreement provides that "[t]he term 'sale’ as used herein shall be construed to include any exchange to which I consent in writing.” The purpose of that language is to make it clear that an "exchange,” which is arguably not a "sale,” is to be treated as a "sale.” The majority erroneously reads the word "exchange” broadly, as "any type of transaction,” and concludes that any type of transaction that is in writing will constitute a sale. Other language in the agreement makes it clear that an "exchange” is an "exchange of properties,” and not every conceivable transaction. Even if a sale "included” all exchanges that were in writing, that would not rule out the possibility there could be some sales that were not in writing. I do agree with the majority that a legally binding contract for the sale of real estate must be in writing. 740 ILCS 80/2 (West 1994). If the Armstrongs and the Millers acted in bad faith to cause the sale to occur after the appropriate period, however, there would be liability for a commission although no written contract had been executed. There is no liability for a commission in this case because the property was not shown to the Millers by anyone during the appropriate period, the term of the listing agreement. Even if there had been a written agreement (or for that matter, a closing) during the extension period, there would be no right to a commission unless the Millers were persons "to whom the property was shown” during the term of the listing agreement.