By Lenore T. Brakefield, Esq. and Logan Wardlow
In a world brimming with contracts and fine print, we have all grown accustomed to simply checking the box or signing on the dotted line.
While such practice may be of no consequence in certain circumstances, that is certainly not always the case. For example, those who sign a listing agreement with a broker for the sale of real property without the review of a professional may unknowingly expose themselves to the potential for a real estate broker to lien and foreclose on their property.
Sellers should be aware that certain listing agreements may contain language like the following:
If the transaction shall not be closed because of the refusal, failure or inability of SELLER to perform, or if SELLER fails or refuses to enter into a contract with a ready, willing and able buyer of the Property, SELLER shall pay the Compensation to BROKER in full upon demand by BROKER. In such event, this Listing Contract shall not be terminated, but shall continue in full force and effect. If SELLER fails or refuses to pay BROKER’s Compensation after demand by BROKER, SELLER hereby grants to BROKER the right to place a lien on the property, which lien shall survive termination of this Listing Contract, and can be foreclosed in the same manner as a mortgage on real property. If deposits are retained by SELLER, 50% thereof, but not exceeding the full amount of the Compensation to BROKER, shall be paid to BROKER as full consideration for BROKER’s services, including costs expended by BROKER, and the balance shall be paid to SELLER. (Emphasis added.)
This clause means if the seller does not enter into a contract or close on a contract with a ready, willing, and able buyer or that contract is terminated due to some act of the seller, the broker has the right and may impose a lien, in an amount equal to the broker’s commission had the deal closed, on that property. Once a lien is recorded, the broker is then able to foreclose on the property as if it were a mortgage.
Statutory Verses Contractual
Luckily for sellers, the above language is not required by Florida law to be present in a listing agreement for residential property. Per Section 475.42 of the Florida Statutes, there are only two ways in which a broker can impose a lien on a seller’s property.
(1) Where expressly permitted by contractual agreement (as described above); and
(2) Where the broker obtains and records a judgment.
Given that this provision is a matter of contractual agreement rather than a statutory requirement, it offers room for negotiation between the broker and the seller prior to finalizing the listing agreement. Additionally, alternative listing agreements, like the one offered by Florida Realtors®, does not contain language authorizing the placement of a lien on the seller’s property.
Seek Professional Guidance
If you are contemplating entering into a listing agreement with a Florida real estate broker, seeking professional guidance and legal advice is strongly recommended. Doing so can help you navigate and mitigate potential risks, ensuring that you are well-informed and protected from any less-than-favorable conditions that may be present in listing agreements in Florida. Contact the attorneys at Woodward, Pires & Lombardo, P.A. for professional guidance in these matters. To learn more, please call 239-649-6555 or get in touch online today.
Lenore T. Brakefield, Esq.
Lenore is a partner at Woodward, Pires & Lombardo, P.A. (WPL). She is a Naples native and graduated cum laude from the University of Florida Levin College of Law. She focuses her law practice on civil and commercial litigation, including construction litigation. Lenore also handles local government law, code enforcement violations, community association law, real estate law, and contract and transactional matters. Lenore serves as board counsel to the City of Everglades City Code Enforcement Board and represents the firm’s various municipal and special district clients. Additionally, Lenore is a Certified Financial Litigator (CFL™) by the American Academy for Certified Financial Litigators.
Lenore acknowledges WPL summer associate Logan Wardlow for his contribution to this article. Logan attends The University of Mississippi School of Law in Oxford, Mississippi. He graduated with honors from the University of West Florida with a Bachelor of Science in Business Administration, General Business Major, and a Management and Legal Studies Double Minor.
Woodward, Pires & Lombardo, P.A.
Naples Office:
3200 Tamiami Trail N, Ste 200
Naples, FL 34103
239-649-6555
Marco Island Office:
606 Bald Eagle Dr, Ste 500
Marco Island, Fl 34145
239-394-5161