ask george & chuck
Aug. 27, 2007

Verbal agreements, early termination of representation
Answers to real estate questions as appearing
in the Houston Chronicle

Dear George: We verbally agreed on a sales price to purchase 60 acres of farmland that has an agricultural exemption. The seller had his attorney draw up a contract. We've had the contract for two weeks and haven't done anything with it. How long is the contract good for? If we execute the contract and don't make any changes, does the seller have to execute it? The contract states that the buyers have to provide a title insurance policy. The contract is written so that if the seller does not disclose something, financing falls through, or a title issue surfaces, then we would lose all of the $10,000 earnest money that the contract is calling for. In addition, the seller has offered me $2,000 to tear up the contract as he claims he has a substantially higher offer even though we offered and he accepted full price.

Answer: Verbal agreements regarding the purchase or sale of real property are not worth the paper they're not written on. That's why the seller had his attorney draw up a written contract offer for you to sign. Read the contract offer carefully. What does it state? If you do not understand the contract offer, hire your own attorney to review it and advise you. Has the seller already signed the contract offer? If he's signed it and you sign it and notify him that you've signed it, you've got a contract (i.e., a signed contract offer); then you must follow the instructions contained in the contract as to delivery, earnest money, etc. However, you do not have to sign the contract offer if you do not agree with all the terms and provisions written by the seller's attorney. You can change in writing the terms and provisions with which you don't agree; your new terms become a counteroffer. The bottom line is that you should hire an attorney or a real estate broker experienced in purchasing agricultural tracts.

Dear George: Our listing agent decided to "de-list" our home and no longer represent us; this was his choice. Both parties signed the proper forms, but he now refuses to terminate the buyer's representation contract, which ties us to him until March 3, 2008. It seems as though we, the terminating party, have a valid reason to request termination of this agreement. Is this reasoning valid and legal? We see no reason to reward him with a commission on the purchase of our next home when failed to sell our current home.

Answer: Unless the forms he signed waive your liability for paying any commissions or fees, it may be hard to prove that he chose to take your home off the market. However, requesting an early termination of your buyer's representation agreement without also exposing you to potential liability should you purchase a home may require additional facts regarding exactly how the agent failed to adequately represent your interests as a buyer. Have you spoken to the agent's broker of record? What you should obtain is a letter from the broker waiving any commissions or fees that you might owe for early termination of the buyer representation contract. Should you pursue this matter, call the Texas Association of REALTORS® at 800/873-9155 and ask to speak with someone regarding the association's free Ombudsman Program.