A property owner wished to sell a small apartment building that she owned. She c

Question

A property owner wished to sell a small apartment building that she owned. She consulted a local real estate agent and listed her property. Because she was about to leave on her lengthy winter vacation, she provided the agent with authority to sell the property on her behalf if the terms of any offer received met the terms set out in the listing agreement. A prospective buyer inspected the property during the period of time that the property was listed for sale, but did not make an offer to purchase. Before the property owner returned from her vacation, but after the agency agreement had expired, the prospective buyer returned and made an offer to purchase the property that corresponded with the terms of the listing agreement. The agent accepted the offer on behalf of the property owner. After the purchase agreement was signed, the buyer discovered that the agency agreement had expired. He then began a legal action against the agent. Explain the nature of the buyer’s action and indicate how the case may be decided. Could the property owner ratify the agreement? What factors would affect the ratification?

Explanation / Answer

The buyer can file a case for breach of duty as he has not fulfilled his “Fiduciary Duties”. Fiduciary duties are certain mandated legal duties of the real estate agent to clients, nonclients and principal clients are as follows:

He had breached his fiduciary duty of honesty and agency disclosure where he should have informed the buyer of the agreement with the seller and the expiry of the agreement. He could not transact on behalf of the seller after the expiry of the agency agreement.

The seller can help the agent and avoid legal proceeding by ratifying the agreement as follows:

Contract ratification is possible when the contract is voidable but both parties prefer to execute it and follow the contract. This is normally when the parties have no conflict and there is a “meeting of minds”. This means both parties understood and agree to terms of the contract.

In this case, the seller (Property owner) if still inclined to sell her property and satisfied with already laid down terms with the agent can send a draft letter to the agent. This letter will state why she wants to ratify and feels the contract can be upheld.

The ratifying agreement can state the parties desire to ratify and copy of ratifying agreement can be attached and date of agreement mentioned. The agreement can be signed by both the seller and the agent. This will ensure continuity of agreement of the agent and his ability to sell to the buyer without any legal repercussions.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.