Colorado § 12-10-301 - When entitled to commission.

§ 12-10-301. When entitled to commission.

No real estate agent or broker is entitled to a commission for finding a purchaser who is ready, willing, and able to complete the purchase of real estate as proposed by the owner until the same is consummated or is defeated by the refusal or neglect of the owner to consummate the same as agreed upon.

Source: L. 2019: Entire title R&RE with relocations, (HB 19-1172), ch. 136, p. 642, § 1, effective October 1.

Editor's note: This section is similar to former § 12-61-201 as it existed prior to 2019.

ANNOTATION

Law reviews. For article, "A Decade of Colorado Law: Conflict of Laws, Security, Contracts, and Equity", see 23 Rocky Mt. L. Rev. 247 (1951). For article, "One Year Review of Contracts", see 34 Dicta 85 (1957). For article, "One Year Review of Corporations, Partnerships, and Agency", see 34 Dicta 129 (1957). For note, "Real Estate Brokerage Commissions in Colorado", see 35 Dicta 297 (1958). For note, "Colorado Real Estate Broker Listing Contracts", see 35 U. Colo. L. Rev. 205 (1963). For article, "Finders and Finders' Fees", see 47 Den. L.J. 448 (1970).

Annotator's note. The following annotations include cases decided under former provisions similar to this section.

When broker entitled to commission. The general rule is that a real estate broker, under a valid listing agreement, is entitled to recover a commission (1) when he produces a purchaser who is ready, willing, and able to purchase the property upon the terms designated by the principal, and (2) he is the efficient agent or procuring cause of the sale. Circle T Corp. v. Deerfield, 166 Colo. 238, 444 P.2d 404 (1968); Muck v. McKanna, 687 P.2d 1326 (Colo. App. 1984); Harding v. Lucero, 721 P.2d 695 (Colo. App. 1986); Real Equity Diversification v. Coville, 744 P.2d 756 (Colo. App. 1987); In re Ruetz, 317 B.R. 549 (Bankr. D. Colo. 2004).

Where a vendor refuses to consummate a transaction, and a deal fails because of such refusal, a broker is entitled to his commission. Gerbaz v. Hulsey, 132 Colo. 359, 288 P.2d 357 (1955).

When plaintiffs produced a purchaser ready, willing, and able to purchase the listed property in accordance with the terms and conditions prescribed by the owners, they were entitled to their commission. McCullough v. Thompson, 133 Colo. 352, 295 P.2d 221 (1956); Watson v. United Farm Agency, Inc., 165 Colo. 439, 439 P.2d 738 (1968).

If the actions of the lessor, or his neglect, defeated consummation of this lease, he is not to be relieved of his liability to pay the broker. M.R. Mansfield Realty, Inc. v. Sunshine, 38 Colo. App. 334, 561 P.2d 342 (1976), aff'd, 195 Colo. 95, 575 P.2d 847 (1978).

A broker is entitled to his commission if he produces a ready, willing, and able purchaser, even if the vendor, prior to execution of a contract, refuses to consummate the transaction and the deal fails because of such refusal. Colo. Inv. Servs., Inc., v. Hager, 685 P.2d 1371 (Colo. App. 1984).

Broker entitled to commission where the owner and the purchaser thereafter conduct further negotiations resulting in a change of the terms. Brewer v. Williams, 147 Colo. 146, 362 P.2d 1033 (1961).

The broker must find the purchaser and the sale must proceed from his efforts acting as broker. Bradley Realty Inv. Co. v. Schwartz, 145 Colo. 65, 357 P.2d 638 (1960).

There is no presumption that purchaser is ready, willing, and able to purchase. Horton-Cavey Realty Co. v. Reese, 34 Colo. App. 323, 527 P.2d 914 (1974).

Burden of proof on agent. Real estate agent had the burden to establish not only its authority to act as the sales agent, but also that plaintiff had produced a purchaser who was ready, able, and willing to purchase on the terms proposed by sellers. Horton-Cavey Realty Co. v. Reese, 34 Colo. App. 323, 527 P.2d 914 (1974).

Broker's right to receive the brokerage commission depends upon the terms of the listing agreement and the duties actually performed by the broker. Watson v. United Farm Agency, Inc., 165 Colo. 439, 439 P.2d 738 (1968).

The right to collect a commission is inchoate until the deal closes or the seller refuses or neglects to complete the deal. The contingent or inchoate nature of that interest does not negate the broker or agent's right to receive a commission if the contingencies are satisfied. In re Ruetz, 317 B.R. 549 (Bankr. D. Colo. 2004).

Where by the agreement, the owners expressly agree to do certain things, and the broker does not expressly agree to do anything, courts uniformly hold that such a document is not a binding contract until some service is rendered by the broker looking to the sale of the property. Circle T Corp. v. Deerfield, 166 Colo. 238, 444 P.2d 404 (1968).

A broker who had a nonexclusive listing of property, and who failed to produce a purchaser, ready, willing, and able to buy the listed property upon terms satisfactory to the owner or upon any terms suggested by the owner, was not entitled to a commission upon the sale of the property by another broker. Ginsberg v. Frankenberg, 133 Colo. 382, 295 P.2d 1036 (1956).

Where the list furnished to the broker was not a written listing agreement, this meant that the seller had the privilege of refusing to accept the offer to purchase tendered by the broker on behalf of his client, and it therefore follows that no commission was due. Stavely v. Johnson, 157 Colo. 56, 400 P.2d 922 (1965).

A contract of employment may be oral or may be implied from the particular circumstances of the case. Brewer v. Williams, 147 Colo. 146, 362 P.2d 1033 (1961); Fletcher v. Garrett, 167 Colo. 60, 445 P.2d 401 (1968); Harding v. Lucero, 721 P.2d 695 (Colo. App. 1986).

Where an antecedent oral listing agreement which was subsequently modified in writing was source of brokers' employment and was not dependent upon a particular transaction, such agreement governed two separate and unrelated transactions by which property was sold to purchaser procured by brokers. Harding v. Lucero, 721 P.2d 695 (Colo. App. 1986).

The circumstances from which a contract may be implied seem to be two: first, that the broker or agent has rendered services, and is permitted to do so in such a manner as to indicate that he expected to be paid for these services; and second, that the services are beneficial to the party sought to be made liable. Chambers v. Shivers, 31 Colo. App. 16, 497 P.2d 327 (1972).

The broker's right to remuneration for his service must be predicated on contractual relations existing between himself and the person against whom the alleged right is sought to be enforced. Chambers v. Shivers, 31 Colo. App. 16, 497 P.2d 327 (1972).

Where plaintiff broker failed to show that she had an expectation of being paid a commission by defendant, such failure is fatal to her claim of the existence of an implied contract, and she is not entitled to a commission. Chambers v. Shivers, 31 Colo. App. 16, 497 P.2d 327 (1972).

Absent contract so specifying, one cannot claim broker's commission for merely participating in negotiating or closing transaction between ready buyer and willing seller since such services, as matter of law, are not procuring or efficient cause of sale. Stank v. Michaelson, 32 Colo. App. 75, 506 P.2d 757 (1973).

Where buyer planned to purchase specific property before he contacted plaintiff, and all plaintiff did was assist buyer in completing plan to purchase property, and where plaintiff was not efficient agent or procuring cause of sale, plaintiff was not entitled to broker's commission in absence of contract so specifying. Stank v. Michaelson, 32 Colo. App. 75, 506 P.2d 757 (1973).

A broker cannot recover his fee where the principals merely conclude an executory contract, performance of which depends upon fulfillment of an express condition precedent, but the broker's right to the commission could not be defeated by the owner's failure to perform an unambiguous promise according to the agreed terms of sale. Watson v. United Farm Agency, Inc., 165 Colo. 439, 439 P.2d 738 (1968).

Where the fee is contingent upon the result achieved, the broker is entitled to receive the fee agreed upon regardless of the amount of time spent. Bamford v. Cope, 31 Colo. App. 161, 499 P.2d 639 (1972).

A broker who participates in a transaction resulting in the sale of property without authorization from the seller to act as his agent is not entitled to a commission from the seller. Chambers v. Shivers, 31 Colo. App. 16, 497 P.2d 327 (1972).

Where variation between offer and listing is substantial, seller is at liberty to reject offer without explanation, and the broker may not use the failure to state specific objections as grounds for claiming a commission. Horton-Cavey Realty Co. v. Reese, 34 Colo. App. 323, 527 P.2d 914 (1974).

Where an offer contains substantial additions to or variations from the terms of the listing agreement, the broker is not entitled to a commission, because he failed to perform according to the terms of his employment contract. Regardless of whether the seller is rejecting the offer because of the variations or simply because it has decided not to sell, the broker's duty to submit an offer which substantially meets the terms of the listing agreement remains unfulfilled. Colo. City Dev. Co. v. Jones-Healy Realty, Inc., 195 Colo. 114, 576 P.2d 160 (1978).

A seller may not defeat a broker's right to a commission by rejecting an offer solicited by his broker, without explanation, when the variations between the listing and the offer are of a minor nature. The basis for this rule is that the broker should be given an opportunity to rectify minor variations in order to earn his commission and the premise is that the broker may well be able to obtain concessions on minor problems from the prospective buyer. Horton-Cavey Realty Co. v. Reese, 34 Colo. App. 323, 527 P.2d 914 (1974).

A seller's breach of the referral clause of an exclusive right-to-sell agreement entitles the broker to the commission authorized under the agreement when the conduct underlying the breach leads to a sale of the property. Where the seller intentionally concealed a prospective buyer from the broker, terminated the parties' listing agreement, and then sold the property to the prospective buyer, the seller could not avoid paying the broker's commission authorized under the listing agreement by claiming that the broker did not procure a ready, willing, and able buyer. Int'l Network, Inc. v. Woodard, 2017 COA 44, 405 P.3d 424.

A realty company could recover a brokerage commission under an exclusive listing although it knew that the property stood in joint tenancy and did not secure the signature of one of the joint tenants on the exclusive listing agreement where the agreement was an extension of an earlier agreement which had been signed by both joint tenants, and the husband acted as an agent for his wife in signing the extension agreement who, by her acts and conduct, adopted and ratified the act of her husband. Helgerson v. Fort Collins Realty, Inc., 28 Colo. App. 180, 471 P.2d 630 (1970).

Vendor who does not commit bad faith or culpable conduct is not liable for commission, if sale does not go through and further negotiations between vendor and broker's client result in transaction not contemplated by terms of listing agreement. Harding v. Lucero, 721 P.2d 695 (Colo. App. 1986).

Even though vendor may have breached exclusive listing agreement with real estate agent, agent was not entitled to commission because vendor's sale of the property to partnership of which he was member is not a "sale or exchange" of the property. Cooley Inv. Co. v. Jones, 780 P.2d 29 (Colo. App. 1989).

Purchases by employee of realty firm. Where an employee of a realty firm makes an offer to purchase property which is the subject of that firm's listing with the seller, the realty firm must establish that a full disclosure was made to the seller regarding the employment relationship; and that, following this disclosure, the seller consented to sell to the employee. Horton-Cavey Realty Co. v. Reese, 34 Colo. App. 323, 527 P.2d 914 (1974).

A real estate broker is not entitled to a commission for a sale where the purchaser failed to perform on stipulated date, and the broker's contract with the vendor stated that time was of the essence. Dunton v. Stemme, 117 Colo. 327, 187 P.2d 593 (1947).

Where there is competent evidence from which the trier of the facts may find that a contract of employment was entered into, and that pursuant thereto the broker produced a purchaser ready, willing, and able to buy on the terms and at the price set by the vendor, and that the broker was the efficient agent or procuring cause of the sale, a finding in accordance therewith will not be disturbed. Palmer v. Gleason, 154 Colo. 145, 389 P.2d 90 (1964).

Evidence to establish broker's right to commission held sufficient. Brand v. Merritt, 15 Colo. 286, 25 P. 175 (1890); Chambers v. Shivers, 31 Colo. App. 16, 497 P.2d 327 (1972).

Ordinarily, a broker suing on a contract providing for a fixed commission is entitled to that commission or nothing, because employment contracts with fixed commissions or salaries involve liquidated sums and therefore judgments in suits on them must be for the liquidated amounts or nothing, but the rule is rendered inapplicable where an erroneous verdict is induced by the conduct of defendant. Palmer v. Gleason, 154 Colo. 145, 389 P.2d 90 (1964).

Where an owner's termination of a lease was due to an unreasonable understanding of a lease provision, the termination constituted a refusal or neglect to consummate the contract as agreed upon, and the broker was entitled to his commission. Sunshine v. M.R. Mansfield Realty, Inc., 195 Colo. 95, 575 P.2d 847 (1978).

Where broker not entitled to commission. Where completion of a sale was not prevented through any fault of the sellers but because the broker told sellers "not to appear at the closing unless they came up with cash or certified funds" to pay the broker's fee, the broker himself thwarted the closing and is not entitled to a commission. Denver 1500, Inc. v. Wall, 43 Colo. App. 282, 602 P.2d 903 (1979).

Applied in Reese v. McVittie, 119 Colo. 29, 200 P.2d 390 (1948); Rankin v. McFerrin, 626 P.2d 720 (Colo. App. 1980); McGill Corp. v. Werner, 631 P.2d 1178 (Colo. App. 1981); Re/Max Suburban, Inc. v. Widener, 633 P.2d 530 (Colo. App. 1981).