Can I list multiple properties in a single agreement?
Release Date: 3/5/2013
QUESTION: Our company markets new homes for a builder. The builder’s rep called us recently to request that instead of completing a separate listing agreement for each new home, we complete a “blanket” listing for all of the houses that he is building, or planning to build, in a particular subdivision. The builder suggested that, in the description of the “Property” in paragraph 2 of the Exclusive Right to Sell Listing Agreement, we insert the following on the line for Street Address: “All (builder’s) properties built in (name of subdivision)”. Is this type of “blanket” agreement legal? If so, is it something that you would recommend?
ANSWER: While it is possible to draft a legally binding listing agreement that covers more than one parcel of real estate, the method described by your builder-client would not be sufficient for a variety of reasons. We instead recommend that you continue to sign a separate listing agreement for each property that you list.
Under North Carolina law, in order for a contract to be binding there must be an agreement on terms that are definite. If the contract is not definite and certain in its terms, a court can hold the contract to be void due to lack of certainty. In our view, a listing agreement that covers “all builder’s properties in (a specified) subdivision” could be found void for failing to specify precisely which properties the parties intended to include.
Another potential issue is the uncertain term of the listing agreement that your client is proposing. Rule 58A.0104(a) of the North Carolina Real Estate Commission’s Rules states: “every written agreement for (real estate) brokerage services… shall provide for its existence for a definite period of time.” If the listing agreement proposed by your client is intended to include homes that are not yet built at the time the agreement is signed, the agreement may well lack a definite term when applied to each listed property.
The issue of compensation would also be complicated by the use of a “blanket” listing agreement. Paragraph 7 of the standard Exclusive Right to Sell Listing Agreement provides that the listing agent’s compensation is earned if the Property is sold, or if a ready, willing and able buyer is procured for the Property. If the definition of “Property” includes multiple properties, then arguably your commission would not be due until all of the listed properties are sold. Another problem is that the listing agreement sets forth the listing agent’s compensation as a percentage of the total sale price of the “Property”. If multiple properties are covered by a listing agreement, this provision would have to be modified to clarify how your compensation should be calculated.
While executing separate agreements for each of the builder’s properties may seem cumbersome to your builder-client, that approach will avoid all of the problems discussed above. In our view, separate agreements avoid confusion and will better protect both you and your builder-client.
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