Expired Listing and Seller’s Commission Obligation
QUESTION: I had a listing on a residential property that expired on September 30. One week before the expiration of the listing agreement, the property went under contract. The closing is scheduled for November 15. Does my former client still have to pay me my commission even though the listing period has expired?
ANSWER: The short answer to your question is yes, assuming that you used the standard Exclusive Right to Sell Listing Agreement (form 101). The reason that you are entitled to payment is because the listing agreement makes a clear distinction between when a commission is earned, and when a commission is payable. The key language is in the “Firm’s Compensation” paragraph. That paragraph states that a commission is deemed earned in any of the three circumstances described in the “Fee Earned” subparagraph. One of those circumstances is if the seller agrees to sell the property during the Term of the agreement. The “Firm’s Compensation” paragraph goes on to state that once earned, the commission will be due and payable at closing. The listing agreement does not require that closing take place during the Term of the agreement, or even within a set number of days after the expiration of the Term.
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