July 26th, 2021 at 3:03 pm
A. It must be signed by both John and Paul.
B. It must be signed by either John or Paul.
C. Who must sign depends on whether John and Paul are married to each other.
D. It can be signed by Ringo.
Answer: Answer A is generally correct as a matter of our day-to-day practice, but not as a matter of law. If John and Paul own the property together, we usually want to bind both of them to our listing agreement to help ensure that they are both on board with listing and selling their property. Otherwise, if, for example, only John signs our listing, we may later discover that we are just wasting our time because Paul doesn’t want us as his listing agent, he disapproves of our listing price or terms, or he just doesn’t want to sell.
Answer B is wrong. A listing agreement is an agreement for us to list and market a property for sale in exchange for compensation. A listing agreement is not necessarily a warranty of exclusive ownership, title, and authority to sell. Paragraph 24 of the C.A.R. Residential Listing Agreement does require sellers to warrant that they alone are the property owners with the exclusive authority to sell, but exceptions to ownership, title, or authority can be inserted in the blank lines provided.
Let’s say, for example, that John and Paul are best friends who get along great with each other, but Paul cannot be reached right now, because he’s performing on a cruise ship. You’d be making a pretty safe bet by taking a listing with John only for now, and perhaps inserting as an exception to title in paragraph 24, something like, “Paul is the other 50% owner who will be signing this Agreement on or about August 7, 2021 when he returns from his cruise.”
But what if John and Paul hate each other? In that case, you can still take a listing in John’s name only and insert Paul as an exception to title in paragraph 24. However, you may be wasting your time listing the property, because that hatred usually means that Paul will disagree with anything that John wants, such as listing the property with us.
Answer C is wrong. A married person does not have the authority to obligate his or her spouse to perform on a contract (although a signing spouse may be forced to use community property assets to pay for any liability that spouse incurs).
Answer D is the correct answer. Just like we can take a listing with John only (instead of both John and Paul), we can also take a listing with Ringo only (instead of both John and Paul). The reason we can take a listing with Ringo as a non-owner is, once again, because a listing agreement is merely an agreement for us to list a property in exchange for compensation. A listing agreement is not necessarily a warranty of exclusive ownership, title, and authority to sell if the “Exception to Title” in paragraph 24 is properly completed.
Additionally, just like we have to decide whether taking a listing with John makes sense or will be a waste of time, given that Paul is also an owner, we also have to decide whether taking a listing with Ringo makes sense or will be a waste of time if John and Paul are the only owners. Maybe it does make sense, because Ringo is John’s and Paul’s business manager, attorney, or relative with their full authority to handle the listing and sale. Alternatively, maybe it’s a total waste of time, because Ringo doesn’t even know who John and Paul are.
Stay Tuned Next Week: What about 2 owners signing a purchase agreement?
-Thank You to Marilyn Simon (Pasadena Manager) for suggesting this week’s legal tip!
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