Tristam’s Landing, Inc. v. Wait

Brief Fact Summary. A real estate broker sought to recover a commission for a sale of real estate, which the sale was not consummated.

Synopsis of Rule of Law. The general rule regarding whether a broker is entitled to a commission from one attempting to sell real estate is that, absent special circumstances, the broker is entitled to a commission if he produces a customer who is ready, willing and able to consummate the deal under the terms and price given the broker by the owner.

Facts. Plaintiffs are real estate brokers doing business in Nantucket, Massachusetts. The Defendant owned real estate, which she desired to sell. The Plaintiffs discovered Defendant’s desire to sell and telephoned Defendant asking for authority to show the property. The Defendant orally gave permission to Plaintiffs to show the property, but not exclusively. The price for the property was $110,000.00. The Defendant knew that the customary commission on the island of Nantucket was 5% of the purchase price. Plaintiffs found a prospective buyer, who executed a written offer to purchase for $100,000, which was conveyed to Defendant. The Defendant’s husband wrote to Plaintiffs that a counter-offer of $105,000.00 should be made with a proposed closing date of October 1, 1973. The prospective buyer orally agreed, and a purchase and sale agreement was drawn up by Plaintiffs. The agreement was executed by the prospective buyer and was returned with a check for $10,500.00, which was a ten perc
ent down payment. The agreement was presented by Plaintiffs to Defendant who signed the agreement after discussing it with counsel and accepted the down payment. The Defendant appeared at the closing, but the prospective buyer did not and thereafter refused to go through with the purchase. Defendant has not taken any action to enforce the agreement or recover damages, although Defendant has retained the down payment. Plaintiffs then presented Defendant with a bill for $5,250.00, which was 5% of the purchase price. Defendant refused to pay, stating that the failure of the deal means that no commission had been earned. The lower court found for the Plaintiff and Defendant appealed.

Issue. Are the Plaintiffs entitled to the commission?

Held. No. Judgment for Defendant.
The general rule regarding whether a broker is entitled to a commission from one attempting to sell real estate is that, absent special circumstances, the broker is entitled to a commission if he produces a customer who is ready, willing and able to consummate the deal under the terms and price given the broker by the owner.
The court found that under the facts presented here, the Plaintiffs are not entitled to a commission because there was no unconditional acceptance of the buyer by the seller.
This court adopted the following rule. When a broker is engaged by an owner to find a purchaser, the broker earns a commission when: (1) he produces a purchaser ready, willing and able to buy on the terms provided by the owner; (2) the purchaser enters into a binding contract with the owner to do so; and (3) the purchaser completes the transaction by closing title in accordance with the provisions of the contract.
If the deal is not consummated because of lack of financial ability on the part of the buyer, or other default of the buyer, then there is no commission as against the seller. However, if the failure of completion of the contract results from the wrongful act or interference of the seller, then commission must be paid.

Discussion. Notice that this case did not specify the reason(s) that the prospective buyer did not consummate the deal. One may infer, from the rule announced by the court in that the failure of the deal was not from any fault of the seller (Defendan