Best of the Hotline: Dual agency delivers

By James L. Goldsmith, Esq. and Brett M. Woodburn, Esq.

Facts. The backdrop for this question is fairly familiar. A buyer agent is showing homes to buyers and realizes that one of his listings would be absolutely “perfect” for the young couple. He shows the couple the property and after some discussions with them, they put together a very attractive offer. Knowing that the sellers are out of town, the agent (now a dual agent) emails the offer to the sellers and follows the email with a telephone call to discuss the terms of the offer. Because the sellers are anxious to sell the property (they already closed on their new home), and because the agent did a good job putting together an offer that basically met his sellers’ needs, the sellers were satisfied with the offer and told the agent they would sign it as presented and drop it off to him that evening at his office. While the agent is waiting for the sellers to arrive, he received a call from a cooperating agent stating that she wanted to present an offer that night; of course, the offer has better terms. When the sellers arrived with the executed agreement, the listing agent told the sellers to “hold onto it for a minute” and then proceeded to explain the terms of the new offer that he expected to be presented within the hour. Of course, the sellers went with the better offer.

Q. Is there a binding agreement of sale or can the agent avoid accepting delivery of the signed offer (“Don’t hand me the signed agreement sellers…”) then attempt to structure a better deal for the seller through the cooperating office?

A. A simple question? I think so. Under the facts described, the sellers accepted the buyers’ written offer without change. A fully executed offer constitutes a binding agreement . . .when? When received by the listing office? When received by the selling office? When viewed by the dual agent? How about when the seller tells the dual agent that she has signed it and is the process of scanning/emailing or is placing it in the mail. Under this scenario, because the agent is a dual agent, I think there is a very strong argument that the agreement is binding and that delivery took place when the sellers told their agent that they executed the agreement without change.

Regardless of how many calls I answer on the Hotline, I am continually surprised by the situations Hotline callers describe. In this transaction, the dual agent was seemingly unaware of the coexistent duty he had to his buyers when called those buyers and reported that a better offer had been received and that the sellers were accepting it. Can you imagine the trouble headed that agent’s way when his buyers learn that “their” agent disregarded their interests in favor of the sellers’ interests! Can you picture the sellers’ faces when they learn that the first buyers hired a lawyer and filed suit against them for breach of contract, and attached a lis pendens to the property?

Agency can be complicated. When agents take on the mantle of dual agency, they further complicate their relationships because they have competing duties of loyalty to buyers and sellers, especially when facts such as these develop. In this transaction, the timing of the second offer and the “delivery” of the executed first offer added a whole new dimension that the agent failed to comprehend. Delivery issues can be confusing; the competing obligations of dual agency can also be confusing. Be sure to consult your broker (and perhaps legal counsel) when either of these issues arise; it is far better to have a frank discussion with your clients before there are two agreements of sale!