2.15 TERMINATION OF BROKER EMPLOYMENT AGREEMENTS

A broker employment agreement is a contract between a broker and a seller or buyer. Its success depends on the broker’s personal and professional efforts.

Because broker services are unique, a broker cannot turn over the contract to another broker without the principal’s written consent. The client cannot force the broker to perform, but the

broker’s failure to work diligently toward fulfilling the contract’s terms constitutes abandonment of the contract. In the event the contract is abandoned or revoked by the broker, the principal is entitled to sue the broker for damages.

On the other hand, the principal might fail to fulfill the terms of the agreement. For instance, a property owner who refuses to cooperate with the broker’s reasonable requests, such as allowing the broker to show the property to prospective buyers or refusing to proceed with a completed sales contract, could be liable for damages to the broker. If either party cancels the contract, one party may be liable for damages to the other.

An employment agreement may be canceled for the following reasons:

• When the agreement’s purpose is fulfilled
• When the agreement’s term expires without a successful transfer
• If the property is destroyed or its use is changed by some force outside the client’s control, such as a zoning change or condemnation by eminent domain
• If title to the property is transferred by operation of law, as in the case of the client’s bankruptcy or Foreclosure sale:
• If the broker and client mutually agree to end the agreement
• If either the broker or the client dies or becomes incapacitated
• If either the broker or client breaches the contract, the agreement is terminated and the breaching or canceling party may be liable to the other for damages.

In Illinois, except as may be provided in a written agreement between the broker and the client, neither a sponsoring broker nor any licensee affiliated with the sponsoring broker owes any further duties to the client after termination, expiration, or completion of performance of the brokerage agreement except:

• to account for all monies and property relating to the transaction,
• to keep confidential all confidential information received during the course of the brokerage agreement.

Case Studies/Scenarios/Role-playing  #6
Handling Multiple Offers and Counteroffers

Seller Kelly listed her home with Broker Tiffany of Patton Realty Company. Broker Tiffany listed Kelly’s property at a reasonable price, and the property attracted several offers, including an offer from broker Tiffany’s own buyer. Broker tiffany now has several offers, how should she proceed.

1. Broker Tiffany should work with her own offer as a dual agent because she knows the buyer very well, and there will be no problem with this transaction if Tiffany controls both sides.
2. Broker Tiffany should just go with the highest price offer.
3. Broker Tiffany should give all of the offers to the seller and give the seller Kelly a few days to decide which one she wants to accept.
4. Broker Tiffany should review, present, and discuss the terms of each offer and let the seller, Kelly, decide.

Instructors Note: Break up the students into groups of three. One as seller Kelly, One as Broker Tiffany and one observer. Give them 5 minutes for discussion among themselves then discuss them in class.