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A seller listed a property for sale and a buyer submitted an offer through a buyer’s agent. The seller accepted the offer and escrow was opened. During the loan application process the mortgage officer noticed that the property had been recently purchased and the buyers did not qualify for an FHA loan due to the FHA 91 day flipping rule. That escrow was cancelled using a contract addendum signed by the buyers and sellers, and the buyers EMD was returned. The buyer’s agent then quit the first broker and became associated with another broker. After 91 days the same buyer submitted another offer to the seller through the same buyer’s agent. Escrow was opened and the property was sold.
Did the buyers agent do anything wrong?
Did the sellers agent do anything wrong?
Can the first broker sue the seller for a commission?
Can the first broker sue the buyers for a commission?
No the buyers agent didn't do anything wrong.
The listing agent didn't do anything wrong.
The first broker can't sue the seller for commission because the seller has no obligation to pay commission to that broker, only to their listing agent. The first broker can't sue the buyers for commission unless they have a buyer agency agreement with the buyer.
The first broker can only sue the listing agent for compensation since that is who was agreeing to pay them in the first place. Typically agents work out referral fees in situations like this in order to make sure things go smoothly.
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