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CK Family Irrevocable Tr. No. 1 v. My Home Grp. Real Estate LLC - 7/28/2020

Arizona Court of Appeals Division One holds that a listing agreement signed by a real estate agent is valid and enforceable even if the designated broker for the agent’s company fails to review and initial the agreement, as required by statute.

A trust executed a listing agreement with a brokerage company and one of its agents to sell a house.  Under the agreement, the trust agreed to pay the company six percent of the final sales price.  Although the agent signed the agreement, the company’s designated broker did not initial it, as required by A.R.S. § 31-2151.01(G).  When the house sold, the trust filed a declaratory judgment action alleging that it did not owe the commission because of the broker’s failure to initial the agreement.  The superior court granted summary judgment to the company.  The trust appealed and the Court of Appeals affirmed.

Section 31-2151.01 requires a licensed broker to keep certain records and to exercise specified control’s over the broker’s trust fund account.  Failure to maintain the required records may lead to suspension or revocation of the broker’s license.  Section (G) requires the broker to review each listing agreement within the date of execution and initial and date the agreement.  The Court concluded that, under the statutory scheme, any violation of this requirement was a licensing issue for the Arizona Department of Real Estate, and that nothing in the statute suggested that a failure to comply with the statute’s technical requirements allowed a party to avoid paying an earned commission under an executed listing agreement.

Judge Gass delivered the opinion of the court; Judge Weinzweig and Chief Judge Swann joined.

Posted by: Josh Bendor

Posted On: 9/9/2020