Many listing agreements will say that the Listing Agent is entitled to compensation when they assist in the closing, or when they bring a Buyer who is “ready, willing, and able” to purchase. It begs the question, then, “What does it mean to be ready, willing, and able?” [from here on we’ll abbreviate it as “RW&A”]
To be RW&A, there has to be more than just a buyer offering full price to purchase. The court in Voin v. Szabo, 913 P2d 717 (Or. App. 1996) held that a party was not RW&A except in situations where, “but for a [party’s] repudiation, a contract might have been performed.”
Additional caselaw helps to get a rough outline of what that case meant:
- Aurora Aviation v. AAR Western Skyways, 75 Or. App. 598 (1985), purchaser of a plane paid $95,000 out of the $115,000 purchase price on a plane, company sold the plane to another party when money not forthcoming, purchaser sued and argued it was a contractual breach arguing that they would have had the money to make the purchase soon because they were selling a different plane. The court rejected the argument and found that there was no showing that the purchaser was able to pay the balance on the closing date, nor was the amount of money available in any way to them.
- Takeaway: If the buyer doesn’t have the money in hand or is unable to spend 100% of the purchase price, they were not RW&A.
- Sipe v. Pearson, 556 P.2d 654 (Or. 1976), listing agent selling land in the Coos Bay area to be paid commission if they made the sale, agent asked if they could sell it as two parcels, seller said they’d really like to sell in one, but would accept two buyers if need be. One parcel sold, a purchaser was found for the second, but the seller refused to negotiate and demanded to cancel the listing. The listing agent sued for the commission on the second parcel’s commission. In the trial, it was found that the listing agent had no clue whether the purchaser of the second parcel was financially able to complete the sale, and through their general lack of knowledge about the financial qualifications of the buyer, could not claim that they found someone who was ready, willing, and able.
- Takeaway: If you can’t guarantee that the buyer has the money in hand and is able to spend 100% of the purchase price, they are not RW&A. More is required than abstract speculation that the contract might have succeeded if it had gone forward.
- Gibson Bowles, Inc. v. Montgomery, 625 P.2d 670 (Or. App. 1981), seller signed a listing agreement that entitled the agent to compensation if they found a “ready and willing” buyer, the same day a coworker in the agent’s office made an offer to purchase the property using a VA loan, which was accepted. After several buyer delays, the seller chose to cancel the transaction. The listing agent sued for their compensation, arguing they found a purchaser and that the transaction failed as a result of the seller’s actions [seller agent compensation in lieu of a closing generally requires the seller to be the reason for the termination]. The court found that there was a ready and willing buyer in this instance, but the buyer was not able to purchase as required by the contract, and it is uncertain that the transaction would have failed by reason of the seller’s failure alone.
- Takeaway: Entitlement to compensation is based on the seller’s failure when there is a ready, willing, and able buyer. If the transaction does not fail through the seller’s own missteps and is attributable to buyer failures, the listing agent has not found an RW&A buyer.
At law, for a buyer to be RW&A, there must essentially be no further steps for the buyer to take. If they have signed the documents in escrow and everything is awaiting merely the seller’s signatures, then at that stage, the buyer would be RW&A. The compensation segments of a listing agreement that say “I’m entitled to compensation when I find a RW&A Buyer” largely mean “if you get cold feet while staring at the signature line and holding the pen at the closing office, I still get paid” not “if I find a Buyer who put in an offer at asking price, I get paid.”