A California listing broker takes an exclusive right to sell listing providing a 5% commission payable to the listing broker. The seller asks the broker to add a clause stating that the seller will not be responsible for compensating any buyer's broker whose written agreement with the buyer already requires the buyer to pay that broker. Under California law, is this clause enforceable?
Correct Answer
A) Yes, because compensation is negotiable and no law obliges a seller to pay the buyer's broker
Compensation terms in a listing agreement are a matter of private contract between the seller and the listing broker, and California underscores that by requiring the notice that commission rates are not fixed by law and are negotiable. No statute makes a seller responsible for compensating the broker on the other side, and since August 2024 a multiple listing service may not publish an offer of compensation to buyer brokers, so there is no industry rule forcing one either. A buyer's broker whose written representation agreement obligates the buyer to pay looks to the buyer; the seller remains free to offer a concession, but a clause declining to do so is enforceable.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An agency relationship created by a clear, explicit agreement between the principal and agent, either orally or in writing.
The highest legal obligation of trust and confidence owed by an agent to their principal, requiring the agent to act solely in the principal's best interest.
An agency relationship where the agent agrees to act on behalf of the principal without receiving compensation.
More Laws Of Agency Fiduciary Duties Questions
Under California law, the agency disclosure requirements apply to which types of property?
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A broker who fails to promptly disclose their dual agency status is subject to:
A broker’s fiduciary obligation to protect a seller’s confidential information continues:
A broker has an exclusive agency listing on a property. If the owner sells the property, the broker is entitled to:
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