How can a seller terminate a listing when the listing provides that neither the broker nor the seller has the legal right to unilaterally terminate the listing absent a material breach by the other party? What damages can the broker claim if the broker has costs or fees for advertising or virtual tours or other fees?
The listing is a personal service contract and the seller has the power to terminate the listing at any time because the power to cancel the listing is distinguishable from the right to do so. The listing contract establishes a fiduciary relationship between the seller and broker. The broker cannot compel the seller to remain in the agency relationship or to continue as a party to the listing contract. Cancellation of the listing prior to the expiration date will typically constitute a breach of contract.
A termination without cause may subject the terminating party to a claim for damages. The law allows a broker to seek damages that may include reimbursement for expenses, including the cost of advertisement, and a fee for the broker’s time and services. Assuming the broker had not yet procured a buyer, allowable damages may include out-of-pocket expenses for advertising, marketing, mileage, staging and time. Brokers who keep detailed, thorough and accurate records will be well-served if they are required to prove their damages in court, and they may also increase their likelihood of successfully settling the issue with the seller without litigation by clearly documenting their losses.
Remember, under no circumstances should a broker refuse to stop marketing and advertising a listed property, refuse to remove the listing from the MLS or tell a seller that the seller cannot unilaterally terminate the listing, as these statements do not reflect the seller’s rights. On the other hand, the broker is always free to negotiate with the seller for an acceptable amount of compensation for the loss stemming from the seller’s breach.
Broker Termination of Listings
A seller is refusing to let the agent hold open houses or allow any showings. If the client refuses to cancel the contract, can the listing agent unilaterally cancel the listing contract for breach of contract?
Both the seller and the listing broker have the ability to cancel the listing, but they do not have the right to unilaterally cancel the listing absent a breach by the other party. The seller is apparently in breach of the basic seller cooperation duties in the listing contract. Note also that the agent enters into the listing on behalf of the broker/owner and does not have the right to unilaterally terminate the listing. The agent should discuss the situation with the broker, who may assign another agent to service the transaction, offer to service it himself, or offer the seller the opportunity to terminate the listing contract. If the broker elects to terminate the listing and the seller will not agree, the broker may wish to confer with legal counsel.