California Real Estate Practice Exam

A broker obtained an exclusive listing to sell a piece of property. He spent much time, money, and energy. The seller refused to allow the broker to proceed under the agreement. The broker should:

1. Consider the seller's refusal a breach and sue for damages

2. Consider the seller's refusal a breach and claim the amount of commission as liquidated damages

3. Ignore the seller and proceed

4. Relieve seller of liability, and work on improving relationship so as to enable retaining future business

The correct answer is: Consider the seller's refusal a breach and sue for damages

When a broker has obtained an exclusive listing agreement and the seller refuses to allow the broker to proceed with the sale, the correct course of action is to consider the seller's refusal a breach of contract. This is because an exclusive listing creates a binding agreement whereby the seller grants the broker the right to sell the property, and any refusal to allow the broker to fulfill their duties under that agreement typically constitutes a violation of that contract. By recognizing the seller's actions as a breach, the broker establishes the potential for pursuing legal remedies. Legal action may involve seeking damages, which could include the costs incurred by the broker in preparing the property for sale, marketing efforts, and any other expenditures directly related to the execution of the agreement. This approach allows the broker to seek compensation for their losses that stem from the seller's unjustified refusal to cooperate. Moreover, recognizing a breach of contract empowers the broker with the legal backing necessary to enforce the terms of the listing agreement. It also serves as a formal notification to the seller that their obligations under the contract must be taken seriously. By taking this stance, the broker not only defends their own interests but also helps to uphold the integrity of contractual agreements in real estate transactions.