Can I Cancel A Real Estate Listing Agreement in California?

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The answer? A resounding YES. “Under what circumstances?”, You say? Almost any!

You could be in the middle of selling your home and decide you don’t want to sell after all. Or maybe you landed an agent doing a substandard job and want out of the deal. Perhaps you didn’t get the out-of-state job you were so sure to get. Or maybe you just feel like canceling the listing agreement. You can, and you may cancel a real estate listing agreement in California for whatever reason. There’s even a form to do so among the many documents from the California Association of Realtors called the “Cancellation Of Listing” (C.A.R. Form COL, Revised 4/11).

When you sign the listing agreement, you may find some caveat about compensating the agent/brokerage with which you are entering into the agreement with. Your agent should spell that out for you upon signing the said agreement. (C.A.R. Form RLA, Revised 12/15, also known as the Residential Listing Agreement, Exclusive Authorization, and Right To Sell.)

When reviewing the listing agreement with your agent, check the details on Item 3 on page 1 of 5 of the California Residential Listing Agreement.

3. COMPENSATION TO BROKER:

Notice: The amount or rate of real estate commissions is not fixed by law. They are set by each Broker individually and may be negotiable between Seller and Broker (real estate commissions include all compensation and fees to Broker).

A. Seller agrees to pay to Broker as compensation for services irrespective of agency relationship(s), either _______ percent of the listing price (or if a purchase agreement is entered into, of the purchase price), or

 $_______. AND ___________________ , as follows:

(1) If during the Listing Period, or any extension, Broker, cooperating broker, Seller or any other person procures a ready, willing, and able buyer(s) whose offer to purchase the Property on any price and terms is accepted by Seller, provided the Buyer completes the transaction or is prevented from doing so by Seller. (Broker is entitled to compensation whether any escrow resulting from such offer closes during or after the expiration of the Listing Period, or any extension.)

OR (2) If within _______ calendar days (a) after the end of the Listing Period or any extension; or (b) after any cancellation of this Agreement, unless otherwise agreed, Seller enters into a contract to sell, convey, lease or otherwise transfer the Property to anyone (“Prospective Buyer”) or that person’s related entity: (i) who physically entered and was shown the Property during the Listing Period or any extension by Broker or a cooperating broker; or (ii) for whom Broker or any cooperating broker submitted to Seller a signed, written offer to acquire, lease, exchange or obtain an option on the Property. Seller, however, shall have no obligation to Broker under paragraph 3A(2) unless, not later than the end of the Listing Period or any extension or cancellation, Broker has given Seller a written notice of the names of such Prospective Buyers.

OR (3) If, without Broker’s prior written consent, the Property is withdrawn from sale, conveyed, leased, rented, otherwise transferred, or made unmarketable by a voluntary act of Seller during the Listing Period, or any extension.

B. If completion of the sale is prevented by a party to the transaction other than Seller, then compensation which otherwise would have been earned under paragraph 3A shall be payable only if and when Seller collects damages by suit, arbitration, settlement or otherwise, and then in an amount equal to the lesser of one‐half of the damages recovered or the above compensation, after first deducting title and escrow expenses and the expenses of collection, if any.

C. In addition, Seller agrees to pay Broker: _______________________.

D. Seller has been advised of Broker’s policy regarding cooperation with, and the amount of compensation offered to, other brokers.

(1) Broker is authorized to cooperate with and compensate brokers participating through the multiple listing service(s) (“MLS”) by offering to MLS brokers out of Broker’s compensation specified in 3A, either _______ percent of the purchase price, or  $ _______.

(2) Broker is authorized to cooperate with and compensate brokers operating outside the MLS as per Broker’s policy.

E. Seller hereby irrevocably assigns to Broker the above compensation from Seller’s funds and proceeds in escrow. Broker may submit this Agreement, as instructions to compensate Broker pursuant to paragraph 3A, to any escrow regarding the Property involving Seller and a buyer, Prospective Buyer or other transferee.

F. (1) Seller represents that Seller has not previously entered into a listing agreement with another broker regarding the Property, unless specified as follows: ________________.

(2) Seller warrants that Seller has no obligation to pay compensation to any other broker regarding the Property unless the Property is transferred to any of the following individuals or entities: ____________ .

(3) If the Property is sold to anyone listed above during the time Seller is obligated to compensate another broker: (i) Broker is not entitled to compensation under this Agreement; and (ii) Broker is not obligated to represent Seller in such transaction.

The option of canceling the listing agreement is clearly pointed out in Section 3.A.2. of the listing agreement itself, in addition to the existence of a form specifically FOR canceling the listing agreement. This means you always have the right and the choice to cancel.

There can also be caveats within the cancellation itself. You, as a seller, may be required to pay some or all of the initially agreed-upon commission; again, this should be discussed at the time of listing and mutually agreed upon by the seller and the agent/brokerage.

You can sort anything out with proper and open communication. The best way to approach an agreement is to read and understand what you’re getting into and openly discuss this with your agent/brokerages.  In the case of listing agreements, you don’t just have the option but the right to cancel anytime should you wish to terminate the contract.

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