Home Selling in 90278>Question Details

Sandra Eason, Both Buyer and Seller in 90278

Can broker still charge commission to seller if buyer cancels transaction during escrow?

Asked by Sandra Eason, 90278 Tue Jan 8, 2008

I was 1 of 3 beneficiaries wanting to buyout remaining 2/3 interest of property. There were 2 income properties held in the trust. The successor trustee (an attorney, also not a beneficiary) obtained a real estate broker to sell properties on open market regardless of my wishes. He sold one property out from under me just one day before my financing came through. I was determined not to lose the other property. Only a simple transfer from parent to child needed to be done and financing would be secured. Trustee still tried to sell property out from under me and found another buyer. I filed a lis pendes and buyer cancelled escrow. I ended up with the property but the trustee demanded a 5% commission for the cancelled transaction and a 3 1/2% comm. for the simple transfer of interest(which was not a sale and the broker had nothing to do with it). Total comm. I was charged was $77,000.00 (remember this is only 1/3 of the total comm.) Is this charge legal or justified?

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Answers

6
You should seek legal advice. It's complicated.
Jerry
0 votes Thank Flag Link Tue Aug 11, 2009
Some of the most tragic disputes arise when the trustee and beneficiaries are at odds over a distribution from the trust's principal assets. Such distributions are called "invasions of principal." With a greater understanding of some key trust terms, you may be able to steer clear of such disputes.To be sure you are creating an instrument that will anticipate all possible scenarios and provide tax-saving advantages, pay close attention to the written word.

The interpretation of the standards of distribution can be challenged in court when disputes arise between the trustee and the beneficiaries over disbursement of funds. Qualified attorneys specializing in trusts and estates will carefully weigh all the issues when drafting a trust document and will take time to understand your particular situation.

If provisions in the trust are so broad that trustees have too much discretion over distribution of funds, beneficiaries may be treated by the IRS as the owners of the trust property and taxed accordingly. . Too Much Discretion May Come at a Cost Trust documents employ carefully crafted language to balance the wishes of the grantor with the tax consequences of the provisions.

So this stuff does happen, beleive me.On the flip side, standards left to interpretation by the courts may mean your beneficiaries are not cared for according to your wishes.
0 votes Thank Flag Link Sat Jan 17, 2009
I would most definitely consult with an attorney.

It seems like most listing agreements state that the commission is owed if the broker presents a willing and able buyer, and that if the seller backs out, the broker would be owed a commission. However, it also states that all sellers must sign the listing agreement, and the property can't be sold without the agreement of all sellers. I have no idea how that would translate to a trust though. But, you may have a valid argument that the original listing agreement wasn't valid because not all owners signed it.

I would be really interested to hear how this all works out. Please update if you can.

I really hope you don't have to pay a commission, it seems very unfair.
0 votes Thank Flag Link Thu Jun 12, 2008
Sandra, I sounds like someone trying to make money, not do what is right for people involved. I have never seen a broker get paid without commission closing. I would agree that it would be worth your while to ge an attorney involved, as much as we always hate to do so.
0 votes Thank Flag Link Wed Jan 9, 2008
Sandra - My initial thought is no. The broker did not close the deal, so he is not due a commission. You have an unusual situation. Have you consulted a Real Estate Attorney. I would do this right away if I were you. If you need a referral, please contact me. Best of luck.

Karen Miller
0 votes Thank Flag Link Wed Jan 9, 2008
If you didn't have an agreement to pay the broker a commission in writing... I don't believe you owe them anything.

However, I am not an attorney and some things work differently in different areas, seems that you need to consult one.
Web Reference: http://www.sumnerrealty.com
0 votes Thank Flag Link Tue Jan 8, 2008
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