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I’m about ready to list my house in Florida, and I’m reviewing the Exclusive Right to Sale Listing Agreement that the agent sent me. I told her I’d only do a three-month listing because I live in a very desirable gated community where the houses are usually pending very quickly.
My concern is this verbiage on the agreement:
“Automatic Extensions If you enter into a contract for sale, the term of this agreement will automatically extend through the date of closing. If the closing does not occur for any reason, the Termination Date will automatically extend for the same number of days that the Property was under contract.”
I understand extending my Listing Agreement with her if the house is under contract with a buyer at the time the agreement expires, but it’s the second sentence that disturbs me. I wanted to check with people on this great site before I say anything to her just in case I’m not reading or interpreting this correctly. She lists a lot of homes around here and works for a big brokerage, which is why I thought maybe I don't understand it. However, I saw other Listing Agreements online, including on the Florida Realtors' site, and watched another Florida broker’s YouTube video about their agreement, and they don’t have that clause in there.
Thanks in advance for any advice because I'd like to get my house on the market sooner rather than later.
Last edited by LFJourney; 07-11-2020 at 11:21 AM..
Do your due diligence and hire a real estate attorney. They would review anything and everything in advance and redline or reject anything that was not kosher or you weren't comfortable with.
Remember, a real estate agent cannot practice law, so they can't advise on contractual questions like this. Why wouldn't someone spend $500/$1000 for such services on the most expensive purchase or sale they'll ever make in their life?
I am not an attorney, just a buyer/seller who has always employed a real estate attorney whenever I've bought or sold. It has paid for itself many times over, and helped me to avoid situations that would have been to my detriment in a transaction. Also, when an attorney is involved, things get resolved quickly. Banks, realtors, title companies, etc, all seem to be far more responsive when it's your attorney doing the work.
I’m about ready to list my house in Florida, and I’m reviewing the Exclusive Right to Sale Listing Agreement that the agent sent me. I told her I’d only do a three-month listing because I live in a very desirable gated community where the houses are usually pending very quickly.
My concern is this verbiage on the agreement:
“Automatic Extensions If you enter into a contract for sale, the term of this agreement will automatically extend through the date of closing. If the closing does not occur for any reason, the Termination Date will automatically extend for the same number of days that the Property was under contract.”
I understand extending my Listing Agreement with her if the house is under contract with a buyer at the time the agreement expires, but it’s the second sentence that disturbs me. I wanted to check with people on this great site before I say anything to her just in case I’m not reading or interpreting this correctly. She lists a lot of homes around here and works for a big brokerage, which is why I thought maybe I don't understand it. However, I saw other Listing Agreements online, including on the Florida Realtors' site, and watched another Florida broker’s YouTube video about their agreement, and they don’t have that clause in there.
Thanks in advance for any advice because I'd like to get my house on the market sooner rather than later.
I'll take a stab at explaining that. I'm sure that if I'm wrong, there will be numerous realtors eager to point that out.
I imagine that the "Termination Date" is not the same date as the end of the listing date. If you list for 90 days, then the listing expires at the end of 90 days. However, that is not necessarily the end of your obligation to the realtor. For example, it is typical for real estate listings to have a period of time (say 4 to 6 months) AFTER the listing ends during which if you sell the house to someone that they have introduced to your house, then you still owe them a commission.
Therefore, in your example, if the listing agreement were extended by 30 days due to a deal that didn't work out, then this Termination Date would also be extended by the same number of days.
Now, there are two tricky parts about this. One: Precisely what constitutes "introduced to your property"? and Two: How does the realtor prove that they are the one who "introduced" them to your property?
Do your due diligence and hire a real estate attorney.
They would review anything and everything in advance and redline or reject anything that was not kosher or you weren't comfortable with.
Remember, a real estate agent cannot practice law, so they can't advise on contractual questions like this. Why wouldn't someone spend $500/$1000 for such services on the most expensive purchase or sale they'll ever make in their life?
I am not an attorney, just a buyer/seller who has always employed a real estate attorney whenever I've bought or sold. It has paid for itself many times over, and helped me to avoid situations that would have been to my detriment in a transaction. Also, when an attorney is involved, things get resolved quickly. Banks, realtors, title companies, etc, all seem to be far more responsive when it's your attorney doing the work.
RM
Thanks for the advice. I'm not asking agents or anyone else for legal advice, but I just wanted to know if that second sentence is common. The Listing Agreement the agent sent me seems pretty standard and similar to what's on Florida Realtors' site except they have that additional sentence on the Automatic Extension clause. Again, I agree with and understand the reason for the first sentence, but I don't get the second one because the instructions to agents on the Florida Realtors' site states that the "Listing Agreement may not contain an automatic renewal clause." On the other hand, my agreement doesn't say "Automatic Renewal" but rather "Automatic Extension."
I'll take a stab at explaining that. I'm sure that if I'm wrong, there will be numerous realtors eager to point that out.
I imagine that the "Termination Date" is not the same date as the end of the listing date. If you list for 90 days, then the listing expires at the end of 90 days. However, that is not necessarily the end of your obligation to the realtor. For example, it is typical for real estate listings to have a period of time (say 4 to 6 months) AFTER the listing ends during which if you sell the house to someone that they have introduced to your house, then you still owe them a commission.
Therefore, in your example, if the listing agreement were extended by 30 days due to a deal that didn't work out, then this Termination Date would also be extended by the same number of days.
Now, there are two tricky parts about this. One: Precisely what constitutes "introduced to your property"? and Two: How does the realtor prove that they are the one who "introduced" them to your property?
Thanks for taking a stab at explaining it.
Actually the termination date is the same date as the end of the listing date. There’s a paragraph titled “Term” that shows a beginning date and ending date (90 days later) at 11:59 p.m. After that ending date in parentheses it has “Termination Date.”
But, you bring up a good point in that this is not necessarily the end of my obligation to the realtor. What you’re referring to is the protection period, which I had to educate myself on yesterday because I haven’t sold a house in decades. This is outlined in the compensation section of my Listing Agreement and states that if I don’t hire another agent and I sold my house within 180 days after the termination date to a buyer that they showed the property to, that I’d owe them a commission. I don’t have an issue with this because I wouldn’t try to do anything sleazy anyway with a buyer. As to the tricky part of it, I also researched this online and supposedly they’d have to provide a list of buyers that they showed my property to and who they want to be protected (or something like that).
It just still doesn’t make sense to me how my broker can automatically extend my termination date for the same number of days that my house was under contract for if the closing doesn’t occur for whatever reason ESPECIALLY since floridarealtors.org website says “Definite Expiration Date. Section 475.25(1)(r), Florida Statutes, requires a definite expiration date. The listing agreement may not contain a provision requiring the person signing the listing agreement to notify the broker of the intention to cancel the listing after such definite expiration date. This means the listing agreement may not contain an automatic renewal clause.”
Floridarealtor.org’s website also states “Term of the Listing. If a contract is executed before the expiration of the listing agreement, the listing agreement is automatically extended through the closing on the contract.” This part is totally understandable to me.
It is a standard requirement for listing agreements to have a set expiration date. As far as I know, all states prohibit automatic renewal clauses. It sounds like the clause that you are concerned about is their attempt to assure that they are given an extra chance to sell the house equal to the timeframe in which it was locked into a purchase agreement. Whether you agree to that is up to you. To me, it sounds poorly worded or poorly conceived. They could easily take backup offers instead of relying on that clause.
But...ask her for an explanation of the clause. Perhaps I'm reading something into it that wasn't meant. (In which case, it is poorly worded.)
NOTE: You have considerable leverage to strike any clause that you're not comfortable with prior to listing.
I see nothing to worry about. In laymens terms with an example:
Listing agreement expiration is Sept 15. Property goes under contract on Sept 1 with a Oct 15 close date, the listing agreement automatically extends to Oct. 15. Probably not necessary, but I don't see it as a concern.
Now, lets say on Sept 15, the contract falls through. It would have been under contract 15 days, so now the listing agreement is extended 15 days from Sept 15, putting the new expiration date of Sept 30. It gives the agent a chance to sell it again since they lost a portion of their 3 month marketing time. Seems fine to me.
It is a standard requirement for listing agreements to have a set expiration date. As far as I know, all states prohibit automatic renewal clauses. It sounds like the clause that you are concerned about is their attempt to assure that they are given an extra chance to sell the house equal to the timeframe in which it was locked into a purchase agreement. Whether you agree to that is up to you. To me, it sounds poorly worded or poorly conceived. They could easily take backup offers instead of relying on that clause.
But...ask her for an explanation of the clause. Perhaps I'm reading something into it that wasn't meant. (In which case, it is poorly worded.)
NOTE: You have considerable leverage to strike any clause that you're not comfortable with prior to listing.
Thank you so much for your helpful feedback. How you perceive it is exactly how I did, too. The way I looked at it is she’d essentially be able to extend my agreement for almost as long as the original 90-day listing time frame considering a lot of people have a 60-day close (and I know I’m going to need that). You make me feel a lot better now because my first thought was to strike that sentence, but I wanted to make sure I wasn’t misinterpreting it. I’ll definitely ask her for an explanation of the clause before I do anything.
Last edited by LFJourney; 07-11-2020 at 06:24 PM..
I see nothing to worry about. In laymens terms with an example:
Listing agreement expiration is Sept 15. Property goes under contract on Sept 1 with a Oct 15 close date, the listing agreement automatically extends to Oct. 15. Probably not necessary, but I don't see it as a concern.
Now, lets say on Sept 15, the contract falls through. It would have been under contract 15 days, so now the listing agreement is extended 15 days from Sept 15, putting the new expiration date of Sept 30. It gives the agent a chance to sell it again since they lost a portion of their 3 month marketing time. Seems fine to me.
Hmmm…I think I need to sleep on this now.
Thanks for your point of view.
I don’t have a problem with your first example if it closes on October 15th.
Your second example makes me realize that I do need to get clarification from her. I interpreted “will automatically extend for the same number of days that the Property was under contract” to mean like 60 days if we agreed to a 60-day close, but now you have me wondering what they really mean. In my mind, if the listing agreement expired Sept 15 and my purchase contract falls through that same day, I don’t see why they think the listing should be extended. I also assume they’d be taking any backup offers in that 15-day period anyway as jackmichigan stated. What bugs me about it as much as anything is floridarealtors.org doesn’t have that extra sentence on their website and other Florida Exclusive Right of Sale Listing Agreements that I saw online don’t either. This brokerage gets tons of listings so it seems most people aren’t bothered by that language, which is why I questioned how I was looking at this, or maybe other sellers aren’t as thorough and don’t read the agreement or try to make sure they understand things like I do.
In light of the new information, it seems to me that if your house were under contract for 60 days and the contract fell through on the original expiration date, then the listing agreement would be extended by 60 days even though the actual purchase contract didn't extend beyond the original listing period. In other words, if the listing contract is for 90 days, then that really means that the property must be on the market and not under contract with any buyer for the full 90 days. If any part of that 90 days is taken up by a purchase agreement that falls through, then the listing will be extended by the number of days that the property was under contract. This is based on wording that you and others have provided since I obviously haven't had a chance to read your listing agreement.
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