Thank You For Submiting Feedback!
In a typical multiple listing real estate transaction the selling ("cooperating") broker or salesperson functions as an agent of the listing broker and, consequently, stands in a subagency relationship to the seller. A multiple listing service listing constitutes an offer of subagency by the listing broker to other multiple listing service members to procure a buyer in exchange for the percentage of the sale commission. The listing broker's offer of subagency to other multiple listing service members is an offer for a unilateral contract -- that is, an offer requesting return performance rather than a promise to perform. It is, of course, a fundamental principle of contract law that offers to enter into a contract may not be revoked after acceptance without liability for breach.
Plaintiffs, Odell R. Stortroen and Kathy E. Stortroen, obtained a selling broker because they wanted to purchase a larger home. She consulted a multi listing of homes for sale. The selling broker and plaintiffs prepared an offer on a property. The sellers reviewed the offer with the finance company and rejected the plaintiffs’ offer and counteroffered, giving the plaintiffs until the following evening to respond. The next day the selling broker went to the plaintiffs’ home where they signed the counteroffer. While the selling broker was out of the office, the finance company called and left a message the seller had withdrawn the counteroffer. The sellers accepted a higher offer from the defendants, Carol Ann Carelli and Eugene L. Carelli. Plaintiffs filed a complaint against the finance company and the Carellis, alleging breach of a real estate sales contract and seeking a specific performance decree against the finance company, money damages, and an order requiring the Carellis to vacate the property. The district court awarded summary judgment for the finance company. The district court held that a principal-agent relationship existed between the purchasers and the selling (or "cooperating") broker in connection with the sale and that the purchasers' act of notifying the selling broker's associate of the acceptance of the seller's counteroffer did not constitute notice to the sellers of the acceptance. The parties filed a joint motion requesting certiorari.
Under the circumstances, was there a binding contract between the plaintiff purchasers and the finance company, thereby rendering the grant of summary judgment in favor of the finance company an error?
The court granted certiorari pursuant to Colo. App. R. 50. The court held that in a multiple listing real estate transaction involving residential property, the selling broker, in the absence of a written agreement creating a different agency relationship, was an agent of the listing broker, and, as such was a subagent to the seller. The court held that when the purchasers presented the selling broker with the signed and accepted counteroffer, a binding contract was formed between the purchasers and the finance company. Accordingly, the court reversed the summary judgement award for the finance company.