Commission from liquidated damages in San Francisco Real Estate
A reader asks:Recently one of my friends had his house on the market. They had a buyer in contract who pulled the plug and decided not to buy at the last minute. It went to arbitration and a considerable amount of money was given to the seller. I was surprised to hear that the broker took some of this money as commission. Is this legal and ethical?
Our reply:
Yes it is legal and ethical if it is specified in the listing and/or purchase contract. The listing agreement and the purchase agreement are legal documents that should specify who receives liquidated damages in the case of a default of the buyer. Just as the seller was damaged by the breach of contract of the buyer so was the listing agent who spent time and money marketing the property and brought a buyer that put up money as a deposit. So both the seller and the listing agent are entitled to damages from the breach of the contract of the buyer. However the agent that represented the buyer is not entitled to receive damages from the deposit.
- Janis Stone
posted by SFResidence.com @ 9:47 AM
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