PROSPECTIVE BUYERS in the RLA
RE: Residential Listing Agreement (RLA): Who are PROSPECTIVE BUYERS in the RLA?
Paragraph 3A2 allows the agent to recover commission after the expiration or cancellation of the listing period if buyer contracts to sell, lease or option the Property to any PROSPECTIVE BUYER (defined below) who saw the Property during the listing period.
Paragraph 3A2 of the RLA states:
“If within calendar days (a) after the end of the Listing Period or any extension; or (b) after any cancellation of this Agreement, unless otherwise agreed, Seller enters into a contract to sell, convey, lease or otherwise transfer the Property to anyone (“PROSPECTIVE BUYER”) or that person’s related entity; (i) who physically entered and was shown the Property during the Listing Period or any extension by Broker or a cooperating broker; (ii) for whom Broker or any cooperating broker submitted to Seller a signed, written offer to acquire, lease, exchange or obtain an option on the Property. Seller, however, shall have no obligation to Broker under paragraph 3A2 unless, not later than the end of the Listing Period or any extension or cancellation, Broker has given Seller a written notice of the names of such PROSPECTIVE BUYERS.”
First, the listing agent is required to complete paragraph 3A2 by inserting the number of “calendar days” after expiration that you can receive a commission . A typical number of calendar days is 90, 120 or 180. This period of time is commonly referred to as a “tail period.”
Second, immediately upon cancellation or expiration of the listing period, the listing agent must send a list of names of all PROSPECTIVE BUYERS who either saw the Property or submitted a written offer on the Property to the Seller. This list of PROSPECTIVE BUYERS should be sent by e-mail or facsimile on the same day as the listing is either cancelled or expired. You need proof that you sent it.
If the listing agent does these two things, then he/she gets commission if the Seller subsequently contracts to sell, lease or option the Property to one of these PROSPECTIVE BUYERS during the “tail period.”
However, the listing agent gets no commission if he/she fails to give seller “written notice” of the names of PROSPECTIVE BUYERS immediately upon expiration or cancellation. Paragraph 3A2 goes on to state:
Seller, however, shall have no obligation to Broker under paragraph 3A2 unless, not later than the end of the Listing Period or any extension or cancellation, Broker has given Seller a written notice of the names of such PROSPECTIVE BUYERS.”
It is my recommendation that all listing agents take the following action:
1. Make sure that you insert the number of “calendar days” at the time you take the listing;
2. Make sure that you give “written notice” of the names of all PROSPECTIVE BUYER to the seller by e-mail or facsimile immediately upon expiration or cancellation of the listing period.