March 14th, 2016 at 10:11 pm
Answer: Yes. Certain agreements must generally be in writing and signed by the parties before a court will enforce the agreement. This law is called the Statute of Frauds. An agency agreement authorizing you to represent a client is not one of the enumerated agreements within the Statute of Frauds. However, a commission agreement entitling you to compensation? as an agent? is within the Statute of Frauds. Of course, part of the confusion stems from the fact that a C.A.R. standard-form listing agreement so happens to be both an agency agreement and a commission agreement. In any event, if you and a client both verbally agree that you will be that client’s agent, an agency agreement has been formed, absent anything in writing. Legally, what that means is that you are now exposed to potential liability if you fail to satisfy your fiduciary duty to do whatever is in your client’s best interest. Yet, you are not entitled to any compensation. Be sure to avoid this situation by getting all your listing agreements in writing!
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