South-Western Legal Studies in Business

Oral Agreement to Find Property Seller Not a Listing Agreement under Administrative Rule
Description

Iowa high court held that when a property owner asked a real estate agent to find a buyer for his business in private, there was an oral contract governing the agency that did not fall under the state administrative rule requiring property listings to be in writing to be effective. Listed properties are public information. This was not.

Topic Administrative Law
Key Words

Administrative Rule, Contract, Real Estate Listing

C A S E   S U M M A R Y
Facts

Sisson owned a bar and restaurant. He wanted to sell it, but wanted the fact kept quiet. He told Stewart, a real estate agent, he would pay a ten percent commission if he could find a buyer willing to pay the price he wanted. Stewart talked to Walter about it. Walter signed an agreement to keep the information confidential and agreed not to negotiate with Sisson. But he did. Sisson sold to Walter and paid no commission to Stewart, who then sued for breach of contract. The trial court held that real estate agents were bound by an administrative rule governing their conduct. It stated that any agreement to represent a client must be in writing to be effective. Since Sisson had no written agreement with Stewart, there was no obligation to pay a commission. Sisson appealed.

Decision

Reversed and remanded. Courts defer to administrative rules, such as the one governing real estate listing agreements that requires them to be in writing to be effective. That rule protects both the public and agents in the structure of that business. However, the agreement with Sisson was not a “listing agreement” as covered by the rule. Property that is listed goes on the broker’s list of property for sale. This did not, as the transaction was kept private. Hence, there was a breach of contract, and Stewart may proceed against Sisson on that basis, as the administrative rule did not cover the transaction.

Citation

Stewart v. Sisson, 711 N.W.2d 713 (Sup. Ct., Iowa, 2006)

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