When seller refuses to pay broker commission

Seller Wilson uses Broker Cooper’s services to find a buyer for his property.  They both discuss the commission that Broker Cooper would receive, but they do not sign a written agreement.  Broker Cooper brings in a buyer and is able to successfully bring about a sale.  However, when Broker Cooper sends Seller Wilson an invoice for the commission, Seller Wilson refuses to pay.  Which of these is true in this situation?

  1. Because Broker Cooper only has an oral agreement he can’t enforce his commission claim.
  2. Because Broker Cooper brought a buyer and has an oral agreement with Seller Wilson, he can enforce his commission claim.
  3. If Broker Cooper can find witnesses to the oral agreement, he can enforce his commission.
  4. Broker Cooper can cancel the deal on the basis that he did not receive his commission despite services rendered.

The answer is A.  According to the Statute of Frauds in the California Civil Code, a real estate contract must be in writing to be enforceable in court.

An exception is a lease that ends in one year or less from the date of the agreeement.  Even then, it’s in the best interests of both the landlord and tenant to have a written agreement.

Similarly, any change from the original contract must also be in writing and dated and initialed by the parties involved. The purpose of the law is to prevent perjury, forgery, and dishonest conduct on the part of unscrupulous people in proving the existence and terms of certain im- portant types of contracts. The so-called ‘‘parol evidence rule’’ applies. This rule states that oral evidence may not be used to modify a written contract that appears to be complete. Oral evidence is allowed to prove fraud or other illegal aspects of a written contract. Practically speak- ing, a written contract is simply a good way to help eliminate ambigu- ities and misunderstandings that might arise at a later date.