Listing Commission is Owed if Seller Backs Out

Question: I represented the buyer in the purchase of a Tempe home. Three days before close of escrow the Canadian seller changed his mind and refused to sign the deed to close escrow because of tax problems. The buyer had the financing and all inspection conditions were satisfied. The buyer got his earnest money back because he doesn’t want to hire a lawyer to sue the seller. I believe that as the buyer’s broker I am owed a commission by the listing broker who refuses to talk to me. Am I right?

Answer: Yes. The general rule is that a listing broker has earned a commission if a ready, willing, and able buyer with no remaining contingencies, e.g., financing or inspections, is ready to close the transaction. The listing broker then owes the MLS commission earned by a buyer’s broker.

Note: If the seller refuses to close the sale of a home, the seller will frequently have a “change of heart” and close the transaction if the seller is told by the listing broker that the full listing commission will still have to be paid.

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