Real Estate Law 9th Edition Aalberts Test Bank

Real Estate Law 9th Edition Aalberts Test Bank
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CHAPTER 6
THE SEARCH FOR REAL ESTATE
CHAPTER OUTLINE
I The Real Estate Agent
A. Licensing Requirements
B. Penalties for Acting Without a License
II. Listing Agreements
A. Statute of Frauds
Problem 6
B. Types of Listing Agreements
1. Exclusive Right to Sell
Problem 4, 5, 9
2. Exclusive Agency
Problem 6
3. Open Listing
C. Procuring Cause of Sale
D. Broker's Commission
E. Performance of the Listing Agreement
Blackman De Stefano Real Estate v. Smith, p. 217
Ellsworth Dobbs, Inc. v. Johnson, p. 218
Problem 3
F. Cancellation of the Listing Agreement
Rellinger v. Bremmeyr, p. 220
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Problems 1, 6
G. Multiple Listing
Problem 7
H. Recent Developments in Antitrust and Other Anti-competition Issues
I. Commercial Listing Services
III. The Duties of the Broker
A. Authority of the Broker
B. The Undisclosed Principal and the Secret Agent
C. The Broker's Fiduciary Duty
Transparency 25: Fiduciary Duties

.
Problems 2, 8, 10
D. Buyer Brokering
Saiz v. Horn, p. 221
E. The Broker's Duty of Disclosure to Buyers
F. The Broker's Unauthorized Practice of Law
Crutchley v. First Trust and Savings Bank, p. 223
G. The Internet and the Future of the Real Estate Broker
IV. Interstate Land Sales Full Disclosure Act
V. Discrimination in Selling or Leasing Real Estate
A. Civil Rights Act of 1866
B. Fair Housing Legislation
Fair Housing Council of San Fernando Valley v. Roommates.com, LLC, p. 225
Meyer v. Holley, p, 228
C. State and Local Laws
TEACHING SUGGESTIONS
1. For a general overview of agency law, including the law relating to independent
contractors and workers' compensation, see Chapters 32 and 33 in Clarkson, Miller and
Cross, Business Law, 13th ed. 2015.
2. In covering discrimination, you may want to include chapters in this book covering
redlining and the Equal Credit Opportunity Act (Chapter 9), restrictive covenants and
exclusionary zoning (Chapter 13), and the landlord's selection of tenants (Chapter 11).
DISCUSSION OF ETHICAL AND PUBLIC POLICY ISSUES
1. The discussion on page 191 addresses the ethics of sellers in the treatment of their
brokers. It is common practice when selling residential real estate for brokers to agree to
sell someone’s home only if an exclusive listing agreement exists. One of the primary
reasons that brokers argue for this practice is that sellers can’t be trusted with open listing
or exclusive agency agreements because they may try to by-pass their brokers and deal
directly with buyers who their salespersons and brokers procured. While it’s legal for
sellers to sell the property themselves under these contracts, brokers are still entitled to
their commissions.
Ethically, it may give the greatest good to the greatest number if open listing and
exclusive agency agreements were used more. For example, after the listing is signed, it
is not unusual for someone the seller knows personally to buy the property. With an
exclusive listing agreement the seller must still pay the broker, who may have done
nothing to market the property or to procure this particular buyer. However, with an open
listing or exclusive agency agreement, the buyer and seller might be able to agree to a
lower selling price since no commission would be legally owed. This could benefit all
sellers and buyers, although brokers would lose their commissions. Moreover, brokers
might argue, perhaps correctly, that even if they could trust the seller, they will expend
less effort to market a property if they know the owner can still legally sell it. To
overcome this concern, brokers might raise the rate of commission for these kinds of
contracts, thus lessening the benefit to the seller and causing pain to that party.
However, even with an exclusive listing agreement it is not unusual for a prospective
seller and buyer to wait until the listing expires, typically after 180 days, to make the sale.
In this situation the broker loses the return on his investment in time and money (for
advertising, etc.). If he sues for the commission to prove he was the procuring cause of
the sale, the costs of litigation will be painful for both the seller and the broker. Thus, it
could be argued that, if all parties conducted themselves in good faith, open listing and
exclusive agency agreements might be a more efficient and productive way to sell real
estate in a manner that benefits the greatest number of stakeholders.
2. On page 204 the issue of whether a real estate agent has a moral and/or legal duty to
inform buyers about neighborhood sex offenders is presented. Creating such a duty for
seller’s agents or subagents creates both a legal and ethical quandary for these agents.
From a utilitarian point of view it may be immoral not to inform buyers. For example, if
disclosure occurs and the word spreads about a newly released sex offender, overall
prices could become depressed. The chances of this happening may be lessened by the
fact that this information is posted on websites in many states and so the market has
already responded. However, if an actual sex offense against a neighborhood child does
occur, depending on its severity, it could depress overall prices. The chances of this
happening should also be factored in. Of course the extent of the pain to the child and
family who is victimized is incalculable. The buyer who did not know about the offender
now has a home with a depressed value and may also be concerned about his and/or her
family’s safety. The pleasure is that the agent has gotten a commission she may not
otherwise have gotten had she released the information.
People have a natural right as humans to life and arguably to health and safety.
Regardless of the existence or not of a law, this natural right may impose a duty to
disclose the sex offender so that the families can prevent harm to their children. Certain
states have laws requiring sellers, and by extension, their brokers, to inform buyers of
this. This legal right to the information would also create a moral right for buyers and a
moral duty on brokers. In those states that do not have these specific disclosure laws,
selling agents and subagents do have duties imposed by law to inform buyers of
information that may materially affect the property’s value. Some studies have shown
that the existence of sex offenders depresses values. See for example, Suzanna Hartzell-
Baird, “When Sex Doesn’t Sell: Mitigating the Damaging Effect of Megan’s Law on
Property Values,” 35 Real Estate Law Journal 353 (Winter 2006). Whether this is
enough to be “material” for the creation of the duty, remains to be seen. Of course, a
buyer’s agent would have a fiduciary duty to inform his principal- the buyer- about the
offender particularly if he has children, but even if he does not, due to its potential effects
on the neighborhoods economic and social well-being.
3. On page 210 there is discussion of the ethics and policy implications surrounding the
practice of blockbusting. Blockbusting, while illegal under the Fair Housing Act of 1968,
can create ethical quandaries. One problem confronted by real estate agents, particularly
where racial prejudice exists, is that a broker or salesperson, such as Bob, must be very
careful in answering questions from prospective buyers. As the ethics problem notes, if
Bob is asked whether his company sold a home to a minority buyer and truthfully
answers “yes,” it could start a panic in the neighborhood. This is what anti-blockbusting
laws attempt to stop. If he lies and says that he doesn’t know, he may prevent or lessen
the potential for blockbusting. Thus, it could be argued that lying may give the greatest
good to the greatest number by preventing a sharp drop in land values caused by panic
selling, as well as lessening racial animosities and preserving the rights of minorities to
live in any neighborhood they chose.
Some deontological ethicists, such as Immanuel Kant, arguably the greatest philosopher
in the last 300 years, would disagree. Kant, in his Categorical Imperative, argued that
there is a universal rule in which everyone should do unto others as they would have
everyone do. Since those Bob is dealing with do not want to be lied to, they would want
all people not to lie, even if the lie would prevent panic selling. Kant repudiated the ideas
of utilitarian ethicists who argued that consequences should be the only focus in
determining moral behavior. However, other deontological ethicists, such as W.D. Ross
argue that some duties outweigh others and should be prioritized. Thus, duties may vary
under the circumstances. Bob may think that the moral duty he owes to his former client,
the African-American family, and to the neighborhood outweighs his duty to tell the truth
to this particular questioner.
3. On page 216, there is a discussion concerning the ethical and public policy issues
surrounding laws, proposed in some communities,that outlaw the feeding of the
homeless. The homeless are quite often mentally and physically disabled and so are not
welcomed in any neighborhood. They are also not welcomed in public parks because
others don’t want to be around them and they may litter and despoil the area. They may
also attract drug pushers and other undesirables. To keep them away, communities don’t
want them fed in their public parks.
From a utilitarian viewpoint, such a law may be moral. It may bestow the greatest good to
the greatest number – those who are not homeless – who will better enjoy the parks. It
will also require less taxpayer money to maintain the parks and will likely make them
safer. From a pain perspective, however, not feeding those who may find this as the only
place to find food, will be highly painful. If we calculate the degree of pain, which
utilitarian philosophers, such as Jeremy Bentham called a felicific calculus, we may find
that the pain of hunger suffered by a few may outweigh the pleasure of the many using
the park.
From a rights point of view, humans have natural rights to life, and arguably health and
safety. If being fed is the only way a homeless person in the community can live, than
they should have a natural right to seek food there. In the United States, it would be rare
to find a place that doesn’t have a legally created facility or a private charity to help
people who are homeless and hungry. This may also create a right to be fed under the law
and therefore a moral right to be feed. Many homeless people avoid the government
because they are afraid, sometimes caused by irrational thinking due to their mental
illness, that they will lose their freedom. At this point you might want to discuss a better
public policy for dealing with homelessness, presently a very tough problem in this
country, as a better way to promote this right. You may want to focus on the duties the
government takes on and how they execute the duties they owe to the poor and homeless,
while preserving the property rights and amenities of others.
Lastly, is it fair and just to impose these laws on the homeless? If homeless people and
those who are not homeless, are not considered to be similarly situated in their use of the
park, then it may be fair. However, categorizing some people according to their health
and economic straits as different is a slippery-slope from an ethical point of view. For
example, once we start making such distinctions we could ask should only taxpayers, for
example, have access to a public parks since they’re paying for them? Should those who
pay higher taxes have preference in what they use and the times of use, such as barbeque
pits and other amenities, than those who pay a lower amount of taxes? If all people,
regardless of their status as homeless or not, are considered similarly situated, then they
should all be allowed to eat in the park from a fairness and justice perspective.
IMPORTANT CONCEPTS AND RELATIONSHIPS FOR STUDENTS TO KNOW
1. Know the sources of agency law that regulates real estate professionals.
2. Know the difference between a real estate broker and a real estate salesperson.
3. Know what a REALTOR® is and how that compares with a real estate licensee.
4. Be able to compare and contrast between the major kinds of listing agreements.
5. Know particularly about the exclusive right to sell listing agreements and the reasons why it is used the
most in industry.
6. Know how an open listing works and which competing broker gets the commission.
7. Know what procuring cause is, when it becomes an issue and generally how it is determined.
8. Know the four scenarios discussed in the book for determining whether the broker should receive a
commission even if the deal falls through- the Kruger case on page 180, the Retterer case also on page
180, the Ellsworth case on page 203 and the contractual approach normally used today.
9. In a traditional multiple listing service agreement (MLS), know how the broker for the seller (selling
broker) and the broker for the buyer (subagent) divide the commission.
10. Know the antitrust implications of MLS and other broker activities.
11. Be acquainted with the Federal Trade Commission’s ongoing battle with the National Association of
Realtors over sharing listings with brokers who operate virtual office websites and how they settled their
dispute.
12. Be able to distinguish between express, implied and apparent authority and how they apply to real estate
brokers.
13. Know what a real estate broker’s fiduciary duties are and to whom he/she owes these duties.
14. Know the problems associated with subagents and fiduciary duties and how modern disclosure statutes
apply to control these problems.
15. Know the duties a selling broker and subagent has to disclose to prospective buyers about certain
property conditions that materially affect its value.
16. Know about the Fair Housing Act (FHA) of 1968 and what kinds of persons it protects.
17. Be acquainted with the Interstate Land Sales Full Disclosure Act, how it operates and the kinds of
transactions it is trying to protect.
18. Know about steering and blockbusting and other forms of discrimination and how brokers may
become liable for the actions of their salespersons for these activities.
19. Know in particular, how the FHA of 1968 has affected newer construction to help the disabled.
20. Know about the Americans with Disabilities Act and how it has affected newer construction.
ANSWERS TO TEXT PROBLEMS
1. Mariko may not terminate the agreement. She is not acting in good faith. See McMillan
v. Quincey, 72 S.E. 506 (1911).
2. Trusty, as Green's agent, owes Green a fiduciary duty. The duty was breached when
Trusty (through its salesperson) persuaded Green to give up $ 100,000 in equity in the old
house for a $40,000 equity interest in the new house. In Brown v. Coates, 253 F.2d 36
(D.C. Cir. 1958), the plaintiffs were awarded actual and punitive damages. The court
noted that although punitive damages are usually not allowed in contract cases, when
"one trained and experienced holds himself out to the public as worthy to be trusted. . . .,
and that trust is intentionally and consciously disregarded and exploited for unwarranted
gain, community protection, as well as that of the victim, warrants the imposition of
punitive damages.
3. Carlos owes a commission to Smith. In Brinkman v. Peel, 260 S.W.2d 448 (1953), the
court observed that the "law is that as between realtors who have nonexclusive listings,
the agent first producing a buyer whose offer meets the seller's terms has earned his
commission." This is true even though Carlos must also pay a commission to Jones.
4. Cleon is liable to Chumney because the contract was an "exclusive right to sell"
agreement. Although Cleon argued that the commission was a penalty and unenforceable,
the court, in Chumney v. Stott, 381 P.2d 84 (1963), concluded that his liability was
"essentially in fulfillment of the obligations created by the contract rather than in the
form of liquidated damages for the breach thereof. ... It is to be kept firmly in mind that
the courts recognize the rights of parties freely to contract and are extremely reluctant to
do anything which will fail to give full recognition to such rights." The damages would
be 6% of $120,000, or $7,200.
5. Broadway is not entitled to a commission. The court in Broadway Realty and Trust,
Inc. v. Gould, 665 P.2d 580 (Ariz. 1983), concluded that agreements providing for
payment of the "usual", "regular", or "legal rate of' commission are not specific enough to
satisfy the Statute of Frauds. The language used in the listing agreement in this case is
similar to such language.
6. Flora is not entitled to a commission. The court, in Bartlett v. Keith, 90 N.E.2d 308
(1950), concluded that because this is an exclusive agency agreement, the agent is not
entitled to a commission when the owner finds a buyer.
7. The board's actions are not legal. The court in Marin County Board of Realtors v.
Palsson, 549 P.2d 833 (1976), ruled that the California anti trust -statute, which is
modeled after the Sherman Act, applied to the board's activities. While the board's
practices were not "per se" violations of the statute, they did present serious
anticompetitive dangers. The "primarily engaged" requirement was found to inflict
especially severe economic detriment on part-timers because it resulted in a denial of
employment with no justification.
8. Decision for the Smalleys. The court in Schepers v. Lautenschlager, 112 .W.2d 767
(1962), noted that it is the duty of a broker "to give his client the fullest information
concerning his transactions and dealings in relation to the property with reference to
which he is employed. A broker cannot, without violating his general duty of good faith,
act for persons having interests adverse to those of his employer, unless he acts with the
consent of his employer given with full knowledge of the facts." This duty of good faith
places the broker under a legal obligation to make a full, fair, and prompt disclosure to
his employer of all facts within his knowledge. "Thus, it is the duty of a broker who is
employed to sell property at a specified price to inform his principal of the fact that the
property has become of enhanced value since the time when it was placed in his hands for
sale, or, upon hearing that a more advantageous sale or exchange can be made." A broker
who breaches this duty is liable to his principal for whatever loss the latter may suffer as
a consequence thereof and the broker also forfeits his commission.
9. The Golds owe Rossi $205,000. Larker had authority to accept only $5000. "A real
estate agent is generally a special agent with limited power and is, therefore, in dealing
with land, closely restricted within the terms of his agency." Gerig v. Russ, 264 P.2d
1045 (1953).
10. This question is designed to encourage discussion about the legal and ethical pitfalls
inherent in the traditional subagency arrangement and why having a buyer’s agent may
lessen these pitfalls. In a traditional subagency situation, Mantecon might be legally and
ethically at fault for informing Jameson of these potential problems since he has a duty, at
least derivatively under the listing contract, to represent the best interests of Sullivan, the
seller. His only legal and ethical duty is to disclose to Jameson problems that may
materially affect the property. This would likely not include the potential for having to
pay higher energy bills and having to remodel a downstairs room someday. Of course,
subagents often inform the prospective buyers of such matters and this information does
influence how much buyers will offer. In the process, subagents may be breaching the
fiduciary duties (both legal and ethical) they owe to the sellers.
Ethically, you might argue that subagency facilitates sales by creating a less adversarial
environment, since no one represents the buyer’s interests. Does this create the greatest
good for the greatest number by creating efficiencies in transacting the sale? It is often
argued that a buyer’s agent creates a more adversarial transactional environment which
may lessen prices.
Is it fair and just for a subagent to treat sellers better than buyers? If you can argue that
sellers and buyers are similarly situated, then they should be afforded the same
information. However, adversarial parties cannot logically be classified as similarly
situated. On the other hand, buyers commonly assume that the subagent is representing
their interests. Thus, their perception is that they are similarly situated with sellers in
terms of having their interests represented by an agent, including the receipt of pertinent
information about the property they are thinking of buying.
To create a more fair and just environment, buyers should be fully informed of what their
rights are and who is representing their interests. Today, most states require sellers’
brokers to inform potential buyers that they are representing sellers (see page 191). These
disclosure requirements are a good example of positive law created to advance a more
ethical environment in real estate.
Test Bank
ESSAY QUESTIONS
1. Cravaack hired Scott, a real estate broker, to sell her motel. Scott procured
Eichenhorst, a potential purchaser. After lengthy negotiations Cravaack and Eichenhorst
finally agreed to ten s of the sale. However, before the sale could be consummated
Cravaack sought to withdraw from the sale. Scott claims he is entitled to his commission
regardless of whether a sale actually takes place. Is he correct? Why?
2. Fair Elms College (F.E.C.), a private, church-sponsored college, insists on separate

living arrangements for unmarried men and women students. Landlords renting off-
campus housing to F.E.C. students in a nearby city are required to comply with the
college's prohibition against mingling of the sexes. Mary, a non-student, applied for
housing at a residence occupied by only male students from F.E.D. She was denied
quarters. Does Mary have any legal recourse? Why?
3. Barringer signed a real estate listing agreement with American Property Services for
the sale of certain property. The agreement provided that American would have the
exclusive right to sell Barringer's property for the term of the agreement. A few months
before the agreement was to terminate, Barringer personally negotiated and sold the
property covered by the listing agreement. American claims that Barringer owes it the
agreed-upon commission. Is American correct? Why?
4. Pomanowski, a licensed New Jersey real estate broker, was a member of the
Monmouth County Board of Realtors. He terminated his membership in the board due to
a disagreement with the philosophy of conduct and operation of the organization. One of
the services provided board members was the use of a multiple-listing service for a fee.
As a non-member Pomanowski now will not be permitted to use the multiple-listing
service. He objects to his exclusion and files suit claiming the board is violating anti-trust
law. Should Pomanowski prevail? Why?
5. Archie has decided to sell his house. He lists the house with Edith, a local real estate
broker, and signs a listing agreement. The agreement states that Edith is the exclusive
agent and is to receive a 7% commission. Edith finds a buyer, a contract of sale is signed
with no mention of financing, but the buyer cannot complete the purchase because of
inadequate financing. Is Edith entitled to a commission? Why? Assuming that Archie is
liable for a commission, what method(s) could Archie use to avoid liability in the future?
TRUE-FALSE QUESTIONS
6. In most states, licensed real estate brokers and salespersons must also be members of
the National Association of Realtors. FALSE
7. In most cases, an unlicensed real estate broker may collect a commission earned on the
sale of real estate, regardless of who makes the sale, under an "exclusive right to sell"
agreement. FALSE
8. Language such as "a commission is to be paid to the broker whether the purchaser is
secured by the broker or by any person other than the seller" creates an "exclusive right to
sell" listing agreement. FALSE
9. In some states a person may broker a sale of property not as an agent with fiduciary
duties, but as a transactional broker who simply “assists” a particularly party and is not a
fiduciary to that party. TRUE
10. Under the traditional rule, a broker earns a commission under a listing agreement
whenever he procures a buyer who is "ready, willing and able" to purchase the real estate,
even if the seller refuses to sign a contract with the buyer. TRUE
11. A seller of real estate may cancel at any time a listing agreement that is to be in effect
for a specified time, if the broker has given consideration. FALSE
12. Traditionally, the broker whose client bought property listed by another broker, was
considered a subagent of the seller, not the agent of the buyer. TRUE
13. Competing brokers A and B meet for lunch and decide to set commissions at 6
percent for a two month period. This activity would be illegal per se under antitrust law.
TRUE
14. The Federal Trade Commission has ruled that the National Association of Realtors®
is violating antitrust law when it excludes brokers who operate virtual office websites
from giving their clients property listings. TRUE
15. Generally, a broker has implied authority to both advertise the house and to accept
money from the buyer. FALSE
16. As a general rule, an agent will be held personally liable for contracts negotiated on
behalf of a principal. FALSE
17. Under a buyer-broker arrangement, a buyer may not leave her agent for another
buyer agent if she signs an exclusive agency contract without being liable for a
commission if the broker finds her a property to buy. TRUE
18. Only licensed real estate brokers can advertise homes on the World Wide Web since
this information can be accessed by potential buyers in interstate commerce. FALSE
19. The Civil Rights Act of 1866 is the most comprehensive legislation in terms of types
of discrimination prohibited in selling or leasing real estate. FALSE
20. Under the U.S Supreme Court’s ruling in Meyer v. Holley, brokers are still strictly
and personally liable when their agents violate the Fair Housing Act of 1968. FALSE
MULTIPLE CHOICE QUESTIONS

(Answers in boldface are correct)
21. Rick signed a listing agreement with Paul, a real estate agent. The agreement stated that if
Rick or anyone acting on his behalf should sell his property, Paul would still be entitled
to his commission. This type of an agreement is a(n):
(a) exclusive right to sell.
(b) open listing.
(c) exclusive agency.
(d) none of the above.
(e) two of the above.
22. A listing agreement providing a real estate agent with an exclusive right to sell property
also contains a "no deal, no commission clause." If a potential purchaser is unable to
obtain financing to complete the purchase after signing a contract:
(a) the agent is entitled to a full commission from the seller.
(b) the agent is not entitled to a commission from the seller.
(c) the agent is entitled to a partial commission from the seller.
(d) the agent is entitled to the "earnest money" paid to the seller.
23. Rob and Kim entered into an oral agreement whereby Rob promises to pay Kim a
commission if Kim produces a ready, willing, and able purchaser of Rob's property.
Before any performance by Kim, the agreement is:
(a) an enforceable contract.
(b) an illegal contract.
(c) not an enforceable contract.
(d) none of the above.
24. Kelsey, a seller, signs two open listing agreements with two brokers, Ryan and Nicole.
Ryan is the first to find Marissa a potential buyer, who agrees to buy the property if a
suitable closing date can be worked out. Without Ryan’s knowledge, Nicole later strikes
a deal with Marissa to close earlier and persuades her to sign the contract to buy Kelsey’s
home. In this situation the commission would go to:
(a) Ryan.
(b) Nicole
(c) Ryan and Nicole would split it 50/50.
(d) Neither
25. Which of the following agents can be held personally liable to third parties for contracts
negotiated on behalf of an undisclosed principal?
(a) General agents.
(b) Special agents.
(c) Secret agents.
(d) Implied agents.
26. Broker A has a listing agreement with the seller. Broker B has found a buyer for the
property, but he is not the buyer’s broker. Assuming that both brokers are subject to an
MLS agreement:
(a) Broker B is a subagent of the seller.
(b) Broker B, in many states, might have to disclose to the buyer that he is not
acting on behalf of the buyer as his agent.
(c) Broker B might owe the buyer a duty to disclose material facts about the
property’s value.
(d) All of the above.
(e) None of the above.
27. Under which of the following types of authority can a real estate broker bind her
principal?
(a) Express.
(b) Implied.
(c) Apparent.
(d) Two of the above (a and b).
(e) All of the above.
28. The 1968 Fair Housing Act and its 1988 amendments prohibit discrimination based on
all the following reasons except:
(a) sex.
(b) race.
(c) disability.
(d) family income.
(e) color.
29. The 1968 Fair Housing Act prohibits discrimination in the following situations:
(a) A denial of the use of real estate services.
(b) Discrimination in the terms or conditions for buying or renting housing.
(c) A denial that housing is available for inspection, sale or rent when it really is
available.
(d) All of the above.
(e) a and b only.
30. Jeff, a real estate agent, sells a home to a black couple in a predominately white
community. After the sale, he goes to the neighbors and encourages them to sell their
homes. He tells them that if they do not, their home values will go down substantially
because of the area’s imminent transition into a black neighborhood. Jeff is engaged in
what illegal practice?
(a) Steering.
(b) Testing.
(c) Blockbusting
(d) NIMBY (Not In My Backyard).
(e) None of these.
ANSWERS TO INSTRUCTOR'S MANUAL QUESTIONS
ESSAY ANSWERS
1. The Court held that Scott was entitled to his commission. Unless the broker's
contract provides otherwise, "the right to compensation on the part of a broker
who has procured a person who is able, ready and willing to purchase the property
on the terms specified by the employer is not lost by a failure of completion of the
transaction because of the default of the employer or his refusal to go through
with the deal." Cravaack could not withdraw her offer after it was accepted.
Eichenhorst's ability and willingness to buy was all that was necessary for Scott to
earn his commission. See Scott v. Cravaack, 372 N.E.2d 1375 (1977).
2. In a similar situation, the U.S. Justice Department threatened to sue Brigham

Young University and 36 landlords near the Provo, Utah campus for violating the
Fair Housing Act. A religious institution has a special position under federal law
which allows it to segregate on the basis of sex. However, this case presents a
situation where a religious institution's right to enforce its religious and moral
teachings affects the rights of non-students under federal law. The issue has not
yet been resolved by the courts.
3. The court held Barringer liable for the payment of the commission to American.
Barringer had argued American did nothing to earn the commission since he had
sold his own property. The court rejected Barringer's argument; the agreement
explicitly allowed American the exclusive right to sell and it was entitled to a
commission if the property was sold during the term of the agreement, regardless
of who sold it. See American Property Services v. Barringer, 256 N.W.2d 887
(1977).
4. The court held that the Monmouth County Board of Realtors violated the state's
antitrust statute. The membership requirement for the use of the multiple-listing
service was found to be an unreasonable restraint of trade. The court found that
there was no reasonable justification for requiring board membership before the
multiple-listing services could be used. Moreover, the payment of dues was
unrelated to the actual cost of the listing services, which indicated that exclusion
of non-members was aimed at eliminating competition. See Pornanowski v.
Monmouth County Board of Realtors, 377 A.2d 791 (1977).
5. Under the rule discussed in the Retterer v. Bender case on page 180, Edith would
be entitled to her commission. Under Retterer the broker is not required to find a
ready, willing and able buyer for Archie’s house, just find a purchaser who signs a
contract of sale. To avoid paying the commission, Archie should have included a
“no deal, no commission” clause in the listing agreement. Some states have
rejected the Retterer rationale and state that the seller is only liable for a
commission based upon the buyer’s actual ability to close. See Ellsworth Dobbs
v. Johnson on p. 203.
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THE SEARCH FOR REAL ESTATE

I The Real Estate Agent

B. Penalties for Acting Without a License

II. Listing Agreements

B. Types of Listing Agreements

1. Exclusive Right to Sell

C. Procuring Cause of Sale

E. Performance of the Listing Agreement

Blackman De Stefano Real Estate v. Smith, p. 217

Ellsworth Dobbs, Inc. v. Johnson, p. 218

F. Cancellation of the Listing Agreement

Rellinger v. Bremmeyr, p. 220

H. Recent Developments in Antitrust and Other Anti-competition Issues

I. Commercial Listing Services

III. The Duties of the Broker

A. Authority of the Broker

B. The Undisclosed Principal and the Secret Agent

C. The Broker's Fiduciary Duty

Transparency 25: Fiduciary Duties

Saiz v. Horn, p. 221

E. The Broker's Duty of Disclosure to Buyers

F. The Broker's Unauthorized Practice of Law

Crutchley v. First Trust and Savings Bank, p. 223

G. The Internet and the Future of the Real Estate Broker

IV. Interstate Land Sales Full Disclosure Act

V. Discrimination in Selling or Leasing Real Estate

A. Civil Rights Act of 1866

B. Fair Housing Legislation

Meyer v. Holley, p, 228

C. State and Local Laws

DISCUSSION OF ETHICAL AND PUBLIC POLICY ISSUES

IMPORTANT CONCEPTS AND RELATIONSHIPS FOR STUDENTS TO KNOW

2. Fair Elms College (F.E.C.), a private, church-sponsored college, insists on separate

MULTIPLE CHOICE QUESTIONS

(a) exclusive right to sell.

(b) open listing.

(c) exclusive agency.

(d) none of the above.

(e) two of the above.

(a) the agent is entitled to a full commission from the seller.

(b) the agent is not entitled to a commission from the seller.

(c) the agent is entitled to a partial commission from the seller.

(a) an enforceable contract.

(c) not an enforceable contract.

(d) none of the above.

(c) Ryan and Nicole would split it 50/50.

(a) General agents.

(b) Special agents.

(c) Secret agents.

(d) Implied agents.

(a) Broker B is a subagent of the seller.

(d) All of the above.

(d) Two of the above (a and b).

(e) All of the above.

(d) family income.

(a) A denial of the use of real estate services.

(b) Discrimination in the terms or conditions for buying or renting housing.

(d) All of the above.

(e) a and b only.

(d) NIMBY (Not In My Backyard).