What Happens When a Seller Wants to Terminate your Listing Agreement?

 You’ve worked hard and written 6 offers to purchase your listing. The seller has rejected them all. Now the seller has decided to terminate the listing. What are your rights?
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First, look to the listing to see your options. In Georgia, if there is not an express early termination provision or a material breach of the terms of the listing, clients cannot unilaterally terminate listing agreements or brokerage engagement agreements. That is, sellers do not have a contractual right to terminate and are in breach of the listing contract if they do terminate. If you’ve used the GAR Exclusive Seller Brokerage Engagement Agreement (F101), you won’t find an early termination provision (unless you added it yourself). That is, the GAR listing agreement does not give the seller the right to terminate.
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Bad stuff happens. The Seller sends you something in writing that says “You’re fired!” or “I am terminating this agreement.” However, you do not have to agree or consent. Your rights are far different with a unilateral termination versus a mutual termination to which you agree.

Your Protected Period
Section 5 in the GAR listing agreement lays it out. The Protected Period is the period of time commencing upon the unilateral termination of this Agreement by Seller in writing during which Broker shall be protected for its Commission.

•  If this Agreement is unilaterally terminated by Seller without the consent of the Broker, you retain your protected period. The Protected Period is the number of days remaining on what would have been the original listing as of the date the Seller terminates the Agreement plus the number of days set forth as the Protected Period in Section A.5 of the listing agreement.
•  If the termination is mutual (you agree to a termination), you have forfeited your entire protection period.

Scenario
You have an exclusive listing on a property, but the Seller sends you an email firing you. The seller does not have the right to terminate you in the listing agreement and is in default. You do not agree to the termination. The Seller then lists the property with another agent and enters into a Contract to Sell* the Property during your protection period.

What are your rights:
The Seller owes you a commission per the original listing agreement for a sale to ANY buyer that was shown the property, either in person or virtually, or was provided specific information about or inquired about the Property either directly or through a broker working with the buyer during your protection period.

What are the Rights of the 2nd Listing Agent?
The Seller may also owe a commission to the 2nd listing agent. Though that is not your concern, it is likely that a closing would take place without your commission paid. You can send an invoice to the seller for your commission, but if the seller declines to pay you, you may have to resort to litigation for your commission.

The threat of litigation often results in either a negotiated commission or a full commission. Commission rights and obligations in the GAR listing agreement survive termination.
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Do You Have to Provide Termination Paperwork to The Seller?
You are not required to provide termination paperwork to the seller. However, the GAR Unilateral Termination of Brokerage Engagement Agreement (F155) clearly notes that the termination in unilateral, is not mutual and that the broker’s commission rights are not limited, waived or terminated. It also includes that the client must pay the cost to remove the listing from FMLS. Your rights are still retained even if you do not have this signed, but seeing this in writing (not just verbally) may cause the client to think twice before
proceeding.

This is the language in the Unilateral Termination
In terminating the Agreement, Broker is directed by Client not to perform real estate brokerage services on behalf of the Client after the Termination Date of this notice to terminate. Nothing herein shall be construed as an agreement between the Client and Broker to mutually terminate the Agreement or to limit, waive or terminate Broker’s rights to a commission or the reimbursement of fees and costs resulting from the unilateral
termination of the Agreement by Client. Unilateral Termination of this Agreement by Client does not eliminate the Client’s legal obligation to Broker for commission and/or fees due to Broker as specified in the Brokerage Engagement Agreement.
If the Brokerage Engagement Agreement is a listing agreement, the cost to remove early the listing from any multiple listing service in which the property is listed shall be paid by the Client.

Exception to Protected Period Commission Obligation Does Not Apply
If a seller hires another exclusive listing agent following a normal expiration of a listing agreement, but during a protected period, the first listing agent’s commission rights during the protected period are ended. However, this exception does not apply in the case of a seller’s unilateral termination of a listing.

*Contract to sell includes a lease, lease purchase or lease with an option to purchase.

References:
GAR Exclusive Seller Brokerage Engagement Agreement (F101)
Weissman, Seth. The Red Book on Real Estate Contracts in Georgia (p. 1435). BookBaby. Kindle Edition.

Broker Corner 5/4/23