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COA: Oral Contracts for Real Estate Brokerage Services Are Enforceable

By Sean E. Andrussier

Today the NC COA held that an oral contract for real estate brokerage services can be valid and does not violate the statute of frauds. The case is Scheerer v. Fisher.

Scheerer was a licensed real estate broker. Fisher asked Scheerer to investigate the cost of developing some property, and per Fisher's request Scheerer also negotiated the costs of the development with the owners of the property. Fisher bought the property, and the purchase contract specified that he and his company would pay Scheerer a 2% commission. Fisher also allegedly orally assured Scheerer that he would be paid a 2% commission.

Fisher unilaterally rescinded the contract and entered into an agreement with another party under which that party would purchase the property at a lower price and then assign the purchase contract back to Fisher. Fisher didn't pay Scheerer the 2% commission. The original purchase price under Fisher's initial contract was $20,000,0000 - you can see why Fisher would sue.

The COA held that the trial court should not have granted Fisher's motion to dismiss, and that a contract to pay a commission for real estate brokerage services doesn't have to be in writing. Even though the NC Real Estate Commission rules specified that contracts for brokerage services should be in writing, the COA found that a failure to satisfy this "administrative requirement" doesn't render such contracts invalid. A failure to follow this requirement means that the broker may be subject to discipline by the NC Real Estate Commission, but it doesn't mean that the contract is unenforceable. The COA also held that Plaintiffs' quantum meruit claim should not have been dismissed, because the facts alleged show that there was an implied promise by Fisher to compensate them for services rendered.

Full post as published by North Carolina Appellate Blog on January 19, 2010 (boomark / email).