The key to understanding whether a commission is due because of the “wrongful act or interference of the seller” is the legal concept of a “wrongful act.” A “wrongful act” is “any act which in the ordinary course will infringe on the rights of another to his damage, unless it is done in the exercise of an equal or superior right.” The seller’s willful and unexcused refusal to perform under a valid contract would be “wrongful” because it would infringe on the buyer’s rights under the contract to the buyer’s damage. Similarly, a seller who conspires with the buyer to terminate a purchase agreement and substitute a new one for the purpose of avoiding a commission wrongfully interferes with the closing of the transaction. That is the case because the seller’s actions demonstrate bad faith in the performance of the listing agreement to the broker’s damage and are thus “wrongful.”
A reoccurring “wrongful act” scenario occurs when the seller refuses to take a full price offer for the purchase of the property. Agent entitlement to a commission, either listing or seller side, in such circumstances depends on the seller’s refusal being in some way “wrongful.” There is nothing in the law that would require a seller to accept a full price offer, or any offer, simply because the property is advertised for sale. Refusal to accept an offer is never “wrongful” with respect to the buyer because asking for offers at an advertised price creates no legal obligation to accept any particular offer at that price or any other price.
Because the seller is not legally obligated to accept any offer simply because they listed the property, any “wrongful” act in not accepting a particular offer will have to be “wrongful” with respect to the listing broker’s rights, not the buyer’s rights. The seller’s action with respect to the listing broker can be wrongful only if it deprives the listing broker of some legal right. The legal right at issue, of course, is the right to a commission under the listing agreement. That, in turn, takes us full circle to procuring cause because the broker is entitled to the commission only if the buyer is “willing and able to buy on the terms fixed by the owner.” Click here for a detailed discussion of the procuring cause standard in Oregon.
The “willing and able to buy on the terms fixed by the owner” part of the dispute will turn on the nature of the buyer’s offer. It must be an offer that meets the terms fixed by the seller or the “procured” part of the fight is over. Typically, those terms are found in the listing agreement itself. Unfortunately, all that is usually found in the listing agreement is the listing price. Thus, only one of the terms (the listing price) is actually fixed. What about the rest of the terms of an offer? How can the terms be said to be “fixed by the seller” in a case where the seller rejects an offer at the listed price?
The key again is the requirement that the seller’s actions be “wrongful.” What the broker will ultimately need to show is that the seller’s rejection of the full price offer was in breach of the listing agreement. To do that, the broker will have to show the terms of the offer would be acceptable to a reasonable seller in the same circumstances. That standard may prove difficult to meet given the contingencies associated with a typical buyer’s offer. There is, of course, a lot more to what is and isn’t an acceptable offer than just the price.
Lawyers, of course, understand the nature of wrongful acts and will always argue their client’s actions were not wrongful because the actions were done in the exercise of an equal or superior right. For instance, faced with the buyer’s demand to close, the seller will claim a prior material breach on the buyer’s part justified the seller’s refusal to perform. Similarly, a broker claiming the seller’s bad faith performance of the listing agreement can expect the seller to counter with a claim that the broker did not perform their end of the bargain. In a “refusal to accept a full price offer” fight, the seller will simply point out why the offer was unacceptable even though at the listed price. It is hardly surprising then that collecting a commission simply because the seller refuses a full price offer is a very uphill and uncertain undertaking.
Less uncertain by far are cases in which the seller and buyer conspire to deprive the broker of the commission by terminating the transaction and later making a new one on the same terms. There is no question in such a case that the actions of the both the buyer and the seller are wrongful. The only issue, therefore, will be proving the intent. Similarly, where the seller refuses to perform a valid contract without excuse, there is no question of the seller’s actions being wrongful. That wrongful action (unexcused failure to perform a valid contract) will entitle the broker to the commission under the procuring cause standard used in Oregon.
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