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Captain, sorry, you are mistaken, the purchase contract has nothing, I say again, nothing at all to do with compensation. For any compensation discussion other than acknowledgement in a purchase contract between a buyer and a seller would be illegal as it would be third party interference in a "listing" contract.
The listing contract contains the standards of performance, and only that works in real estate law. The relationship between the listing broker and selling broker as established by the MLS agreement would fall under contract law.
Captain, sorry, you are mistaken, the purchase contract has nothing, I say again, nothing at all to do with compensation. For any compensation discussion other than acknowledgement in a purchase contract between a buyer and a seller would be illegal as it would be third party interference in a "listing" contract.
The listing contract contains the standards of performance, and only that works in real estate law. The relationship between the listing broker and selling broker as established by the MLS agreement would fall under contract law.
Tom, you're correct that the purchase contract has nothing to do with compensation, except that the clause I quoted from the AZ purchase contract informs the escrow officers that the broker(s) will be compensated by separate agreements.
Michelle Lind, Esq. General Counsel for Arizona Association of Realtors states that "Commission agreements should not be addressed in the purchase contract". She further states that " negotiating the commission in the contract can lead to disputes and additional liability".
It is bad practice to negotiate a commission in the purchase contract, and while it may be possible that a court could interpret it as interfering with a third party contract, it is not illegal in AZ.
However, I would never attempt to negotiate a commission in a purchase contract. The only time it's "likely" to happen is with an unrepresented buyer who thinks he can get the seller to renegotiate the listing brokers commission, so he may write that in the contract, or in a cover letter. I would advise my seller accordingly in that event.
The ARMLS Listing Agreement states that the listing agent is due a commission if listing agent brings a ready, willing, and able purchaser. (Without material contingencies. If there are material contingencies then it is only a contingent contract) There does not have to be a COE.
The Buyer Broker commission would be determined by the NAR MLS rules, as, or if, modified by the local MLS. The ARMLS rules state that the buyer broker is due a commission upon sale, which they interpret as a close of escrow.
As I understand this, if the OP's transaction was in AZ, then the listing broker would be due a commission (if there is not a material contingency such as financing) but the buyer broker would not, because the Sale is not completed.
However, for the listing broker it would be foolish to try and collect a commission on the withdrawn contract, because the seller is planning to sell it to a different buyer and the listing broker would be paid in that new contract.
I wish a knowledgeable NC agent had piped in before me.
1. Legally, consult an attorney with experience in residential real estate matters in NC.
2. Anecdotally, this could be a new issue we face in NC. Our contract was revised, during a "Buyer's market" to give the buyer more freedom to walk during the contract and suffer few and known damages. Conversely, it blithely (in my opinion) glossed over "What happens if a Seller changes their mind?" by saying if a Seller defaulted, then by golly they'd owe the Buyers all the expenses the Buyer had incurred and lost.
What the contract didn't consider - again, in my opinion - is in an environment of multiple offers, low inventory, and continued showings and even backup contracts ... what's to keep a Seller from getting an offer that's say $5,000 better than the buyer who is under contract? And then telling Buyer A, "Goodbye. Here's your $500 of due dligence fee plus $1,000 of inspection costs". Nothing.
What happens if a Seller for whatever reason changed their mind the day of closing? Nothing. They can, per the contract, pay the Buyer their documented expenses related to the PURCHASE (not the moving van!) and be done with them.
There's one random clause about "...or any other legal remedy" which I suppose is the catch-all cover your butt way to legalese it. But I'm not a lawyer, seek legal counsel if you really want to try and force someone to sell to you.
Since the OP, "Bounge", has not participated in this thread since posting the question, we may want to consider he/she either found the answer to the question, or is simply a drive-by poster who drops a question while cruising the forum, takes the free advice and drives on. In the meantime, sincere competent agents respond, and sometimes during the process, unfortunately find themselves getting contentious with each other.
We cannot repeat enough that real estate contracts are legal and state-specific, and if the question relates to FL for example, an agent in AK replies, the advice is most likely unreliable. We also only get one side of the story.
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