Cooperating Broker & Seller’s Refusal to Pay Listing Agent

Q: Our agency acted as a subagent for a seller in connection with a commercial transaction. Without our knowledge, the transaction closed and we have been told by the  listing agency that the seller refuses to pay the listing agency its commission. Does that mean the listing agency does not owe our agency the portion of the commission  which was set forth in the MLS listing?

A: Not necessarily. The MLS listing may be characterized as an offer of cooperation and compensation by the listing agency, which your agency accepted by bringing a buyer  to the table who was ready, willing and able to purchase the listed property on terms satisfactory to the seller. It may be argued that your “acceptance” of the MLS “offer”  created a binding contract between the listing agency and your agency. It would be your agency’s position that payment of the commission pursuant to this contract is not  contingent upon receipt by the listing agency of its commission from the seller; therefore, the fact that the listing agency has not received its commission from the seller has  no bearing on your entitlement to be paid pursuant to your contract with the listing agency. However, in deciding whether the listing agency is required to pay your firm its  commission, an arbitration panel may properly consider the circumstances giving rise to a listing agency’s failure to receive its commission. If the panel determines that the listing agency’s failure to receive its commission resulted from circumstances beyond the listing agency’s control, the panel might conclude that the listing firm is not obligated to pay your firm its commission.