The Massachusetts Appeals Court has ruled that the death of a home seller terminated the brokerage agreement between the seller and her real estate agent.
The seller, Shirley Jaffe, listed three residential properties (two in Brookline and one in Newton) with Newton Centre Realty, Inc.
The brokerage agreement stated that
the broker was entitled to a four-percent commission…under any of the three conditions: (1) if the broker procured a ready, willing, and able buyer on terms acceptable to the seller; (2) if the subject property was sold through anyone’s efforts, including the seller’s; or (3) if the property was sold within ninety days after the term of the agreement to anyone the broker introduced to the property during the term of the agreement.
The agreement was binding through August 31, 2018.
The seller died in 2017. In June 2018, the seller’s estate sold all three properties for a combined value of $5,690,000 and refused to pay any commission to the broker.
The broker filed a lawsuit seeking to recover the $227,400 commission. According to the broker’s attorney, the brokerage agreement was still binding at the time of the sale. Therefore, the seller’s estate breached its contract with the broker by failing to pay the commission.
Both the trial court and the court of appeals rejected this argument concluding that the death of the seller terminated the agreement signed with the broker.
According the Appeals Court:
Generally, the death of the principal automatically terminates the actual and apparent authority of the agent because it negates the existence of the person on whose behalf the agent acts.
The Appeals Court also rejected the broker’s argument that the agreement involved an interest in real estate and thus was not nullified by the seller’s death.
The decision states:
a real estate brokerage agreement does not create an interest in property and, accordingly, does not survive the principal’s death under the exception for an agency power coupled with such an interest.
To read the full court opinion click here.
If you have questions about real estate law or need legal representation, please contact me at justin@jrmccarthy.com
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