Is the listing agent entitled to a fee when a builder-client sells all of its assets to a new entity?

QUESTION: My firm entered into several listing agreements with a construction company engaged in the business of land acquisition, development, homebuilding, and home sales. We used the standard Exclusive Right to Sell Listing Agreement (Form 101) for each property we agreed to list. Following the execution of our listing agreements, our client agreed to sell its entire portfolio of properties to an unrelated entity. That sale closed during the term of our listing agreements. As a result of that closing, is my firm entitled to a commission on each of the properties that we have listed?

ANSWER: According to a recent opinion issued by the Court of Appeals of North Carolina, the answer is yes. The opinion, which is considered unpublished, and therefore has limited precedential value, was issued on September 19, 2023 in the case of Courtney Carter Homes vs. Wynn Construction, Inc. A copy of the opinion is available here.

In reaching its decision, the Court of Appeals noted the language in paragraph 7(b)(ii) of Standard Form 101 which states that the listing firm’s fee shall be deemed earned if the Property is “sold, optioned, exchanged, conveyed or transferred, or the Seller agrees, during the Term of this Agreement or any renewal hereof, to sell, option, exchange, convey or transfer the Property at any price and upon any terms whatsoever.” The Court emphasized the word “conveyed.”

According to the Court, it was undisputed that the properties subject to the listing agreements signed by the parties had been conveyed by Wynn Construction to a third-party pursuant to an Asset Purchase Agreement. The court concluded that, pursuant to the express language of the listing agreements, this conveyance entitled the broker to the fee set forth in those agreements.