QUESTION: Broker is representing Buyer as a non-agent in a custom build job on property that was not listed in the MLS. Prior to the transaction Broker specifically spoke with the agent for Seller/Builder who orally promised to share his commission with Broker, then followed his promise up via text message and via email. Broker questions the need for an executed Representation Agreement with Buyer in order to receive compensation under such a cooperation agreement with another brokerage.
RESPONSE: While it is always best practice to enter into written agreements in a regulated real estate transaction, there is no need for a contract with a Buyer if Broker will not be seeking compensation from the Buyer. Idaho Code states:
All real estate brokerage representation agreements, whether with a buyer or seller, must be in writing in the manner required by section 54-2085, Idaho Code.
Idaho Code § 54-2050.
A buyer or seller is not represented by a brokerage in a regulated real estate transaction unless the buyer or seller and the brokerage agree, in a separate written document, to such representation. No type of agency representation may be assumed by a brokerage, buyer or seller or created orally or by implication.
Idaho Code § 54-2084(1).
The above referenced sections are not applicable as Broker is not seeking a commission from Buyer.
Idaho also has the following statute of frauds requirement:
No contract for the payment of any sum of money or thing of value, as and for a commission or reward for the finding or procuring by one person of a purchaser of real estate of another shall be valid unless the same shall be in writing, signed by the owner of such real estate, or his legal, appointed and duly qualified representative.
Idaho Code § 9-508.
While the section stated above clearly pertains to agreements between “owners of such real estate” and those who procure buyers, it is not clear if the section applies to compensation agreements between and among real estate brokerages. Regardless, according to the facts presented to the Hotline, the agent for the Seller/Builder likely confirmed the compensation via text message or email which would likely satisfy the requirements of the statute of frauds under Idaho’s Uniform Electronic Transaction Act. In the event it does not, Idaho courts still allow for compensation in “exceptional circumstances.” See Century 21 Quality Props., Inc. v. Chandler, 103 Idaho 193, 196 (Ct.App.1982).
As stated above, Brokers should always endeavor to have clear written documents setting forth all parties’ roles and obligation prior to, or contemporaneous with, entering into a regulated real estate transaction. This is especially true when a property is not listed in a multiple listing service which forms the basis for the traditional cooperation agreement among Brokers.
