QUESTION:
Yesterday, I sent a signed standard form Offer to Purchase and Contract
to a listing agent through email. The listing agent emailed me back
with a counteroffer, but his email did not have a contract attached with
the sellers’ signatures on it. My buyers liked the counteroffer, so I
emailed the listing agent back, without attaching a new contract, and
told him that my clients had accepted the sellers’ counteroffer.
The listing agent contacted me today and said that the sellers have received another offer and that the sellers will be re-opening the listing to accept the highest and best offer. I explained to him that he could not do that since we were under contract, but he claims that we are not. My clients are very upset. Is the listing agent correct?
ANSWER: As a general rule, a real estate agent in North Carolina does not have the power to bind his client to a contract to convey real property unless the agent has special authority. An agent would have “special authority” in circumstances where a client gave the agent actual authority to act, such as through a power of attorney.
In your example, if your only authority to act for your clients was established through the standard form Buyer Agency Agreement, then you did not have actual authority to bind your clients to a contract. Likewise, if the listing agent’s authority was limited to the powers outlined in the standard form Exclusive Right to Sell Listing Agreement, then he did not have the right to bind his clients to the counteroffer that he made on his clients’ behalf. This means that absent any other facts, your buyers did not have a valid, binding contract for the sellers’ property.
This answer, however, is not the end of the road. The answers to questions like yours are very fact specific, and in some cases it might be possible that there is a contract if you and the listing agent were acting with apparent authority. Apparent authority can occur if your client informs the other party that you have the authority to act for them. So, before you take any action, make sure your clients consult with an attorney to advise them after hearing all the facts. And, in the future be sure to inform your clients that there is no contract until all the parties to the contract have agreed to all the contractual terms and signed the contract.
NCAR provides articles on legal topics as a member service. They are general statements of applicable legal and ethical principles for member education only. They do not constitute legal advice. The services of a private attorney should be sought for legal advice.
© Copyright 2016. North Carolina Association of REALTORS®, Inc. This article is intended solely for the benefit of NCAR members, who may reproduce and distribute it to other NCAR members and their clients, provided it is reproduced in its entirety without any change to its format or content, including disclaimer and copyright notice, and provided that any such reproduction is not intended for monetary gain. Any unauthorized reproduction, use or distribution is prohibited.
The listing agent contacted me today and said that the sellers have received another offer and that the sellers will be re-opening the listing to accept the highest and best offer. I explained to him that he could not do that since we were under contract, but he claims that we are not. My clients are very upset. Is the listing agent correct?
ANSWER: As a general rule, a real estate agent in North Carolina does not have the power to bind his client to a contract to convey real property unless the agent has special authority. An agent would have “special authority” in circumstances where a client gave the agent actual authority to act, such as through a power of attorney.
In your example, if your only authority to act for your clients was established through the standard form Buyer Agency Agreement, then you did not have actual authority to bind your clients to a contract. Likewise, if the listing agent’s authority was limited to the powers outlined in the standard form Exclusive Right to Sell Listing Agreement, then he did not have the right to bind his clients to the counteroffer that he made on his clients’ behalf. This means that absent any other facts, your buyers did not have a valid, binding contract for the sellers’ property.
This answer, however, is not the end of the road. The answers to questions like yours are very fact specific, and in some cases it might be possible that there is a contract if you and the listing agent were acting with apparent authority. Apparent authority can occur if your client informs the other party that you have the authority to act for them. So, before you take any action, make sure your clients consult with an attorney to advise them after hearing all the facts. And, in the future be sure to inform your clients that there is no contract until all the parties to the contract have agreed to all the contractual terms and signed the contract.
NCAR provides articles on legal topics as a member service. They are general statements of applicable legal and ethical principles for member education only. They do not constitute legal advice. The services of a private attorney should be sought for legal advice.
© Copyright 2016. North Carolina Association of REALTORS®, Inc. This article is intended solely for the benefit of NCAR members, who may reproduce and distribute it to other NCAR members and their clients, provided it is reproduced in its entirety without any change to its format or content, including disclaimer and copyright notice, and provided that any such reproduction is not intended for monetary gain. Any unauthorized reproduction, use or distribution is prohibited.
