Page 9 - Minnesota Vol 8 No 6
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ing Agreement. In this type of listing agreement, the owner may simulta- neously list the property with more than one broker.  e  rst broker to secure a sale earns the commission but no commission is earned if the seller procures the buyer.  is type of listing agreement is not o en used since brokers are reluctant to expend the time and resources to market the property without an assurance of compensation.  e Non-Exclusive Listing Agreement is also a mine-  eld for litigation over which broker was the procuring cause of the sale. See Rees- omson-Scroggins, Inc. v. Nelson, 276 Minn. 453, 150 N.W.2d 568 (Minn. 1967).
 ere are certain statutory require- ments that must be met for a listing agreement between the owner of real property and the broker to be valid.  e  rst, and most important step, is to have the parties enter into a writ- ten listing agreement. Aside from the practical bene t to both parties of memorializing an agreement in a written document, a broker must have a written listing agreement in order to commence an action to re- cover an unpaid commission. Minn. Stat. §82.85, Subd. 2. In addition, bro- kers are required to obtain a signed listing agreement (or other signed authorization from the owner of the property or a person authorized to o er the property for sale or lease) before advertising to public that the property is available for sale or lease. Minn. Stat. §82.66, Subd. 1(a).  e next steps necessary for a valid and enforceable listing agreement are set forth in Minn. Stat. §82.66, Subdi- vision 1(b) which requires that the written listing agreement include, among other things: (i) a de nite ex- piration date; (ii) a description of the real property involved; (iii) the list price and any terms required by the seller; (iv) the amount of any com- pensation or commission or the basis for computing the commission; (v) a clear statement of the events or con- ditions that will entitle the broker to a commission; and (vi) information re- garding an override clause, including a statement to the e ect that the over-
ride clause will not be e ective unless the broker provides the seller with a written protective list within seven- ty-two hours a er the expiration of the listing agreement.  e Minne- sota Supreme Court has determined that substantial compliance with the statutory requirements is su cient. Rosenberg v. Heritage Renovations, LLC, 685 N.W.2d 320, 325 (Minn. 2004); Reuben v. Gibbs, 297 Minn. 321, 323, 210 N.W.2d 857, 858 (Minn. 1973). However, please note that a broker cannot recover compensation under quasi-contract or implied-in- fact contract theories in light of the statutory requirement of a written agreement to recover compensation. Krogness v. Best Buy Co. Inc., 524 N.W.2d 282, 286-7 (Minn. Ct. App. 1994); Cambridge Commercial Re- alty, Inc. v. Brooklyn Hotel Partners, LLC, 2014 WL 1272451 at *4 (Minn. Ct. App. 2014).  e key here for ev- eryone involved is to be sure there is a written and signed listing agreement.
It is important for the attorney to understand and advise clients on override clauses. An override clause is a provision in the listing agree- ment allowing the broker to receive a commission when, a er the listing agreement has expired, the property is sold to a person with whom bro- ker or salesperson had negotiated or shown the property prior to the expiration of the listing agreement. Minn. Stat. §82.66, Subd. 1(d)-(e). An override clause cannot extend be- yond six months a er the expiration of the listing agreement. Minn. Stat. §82.66, Subd. 1(c). A broker shall not seek to enforce an override clause unless a protective list has been fur- nished to the seller within seventy- two hours a er the expiration of the listing agreement. Minn. Stat. §82.66, Subd. 1(d)(1). A protective list is the written list of names and addresses of prospective purchasers with whom a broker has negotiated the sale or lease of the property or to whom the broker had shown the property prior to the expiration of the listing agreement. Minn. Stat. §82.55, Subd. 16; §82.66, Subd. 1(e).  e Minnesota Court of Appeals has held that a broker has
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the right to a commission when the broker has been the procuring cause of the sale, even when the sale is completed a er the listing agreement has terminated, provided the broker complies with the override clause and protective list requirements. Douglas v. Schuette, 607 N.W.2d 142, 145-6 (Minn. Ct. App. 2000); Lynn Beechler Realty Co. v. Warnygora, 396 N.W.2d 717, 719-20 (Minn. Ct. App. 1986).  us, take the time to work through the override clause and protective list requirements with your client to be sure everyone is on the same page with the obligation to pay a commis- sion post-expiration or post-termi- nation of the listing agreement.
A quick word about termination of the listing agreement.  e general rule is that a listing agreement that includes a de nite expiration date as required by Minn. Stat. §82.66, Subd. 1(b)(1) will expire by its terms. Of course, the parties may also mu- tually agree to terminate the listing agreement before it expires. A listing agreement that fails to provide a de - nite expiration date but is otherwise in substantial compliance with the statutory requirements is terminable at will. Rosenberg v. Heritage Reno- vations, LLC, 685 N.W.2d 320, 326 (Minn. 2004). Again, work through the listing agreement to arrive a mu- tually agreeable expiration date.
Regardless as to which type of list- ing agreement is used in a commer- cial real estate transaction, your cli- ents need to be advised of the rights and obligations arising out of the list- ing agreement.  is is true even if you are counseling the commercial real estate broker or salesperson, as their right to obtain compensation for their hard work will depend on the validity of the listing agreement.  e listing agreement is not a boilerplate document; rather, it is a document which requires careful consideration, review, negotiation and dra ing.
Author’s Note:  is article incor- porates material found in the Min- nesota Real Estate Purchase and Sale Deskbook, Vol. 1, 2nd Ed. (2015) at §§2.4 and 2.8 written by Marvin Liszt, Esq.,
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