Registration agreements generally apply (and certainly should be) for a period of time, often in the order of six months or a year. While this is reasonable in itself, there could be circumstances in which a seller is not satisfied with the broker`s marketing efforts or other actions of the broker. In such circumstances, the seller would not want to wait until the listing expires to find another broker. Therefore, the seller should provide a mechanism for early termination of the offer. Ideally, the seller would like to have the right to terminate the offer for any reason or no reason after a relatively short prior notification period. Likewise, the seller wishes to have the right to cancel the offer immediately for a valid reason. A broker will often lend himself to reasonable arrangements of this nature, especially if he is protected from potential buyers on a list of prospects and can recover his expenses if the termination was made without good reason. Perhaps the most difficult provision to negotiate in a registration agreement is the compensation provision. The broker does not want to be held liable to anyone in their efforts to market the seller`s property. Therefore, many listing agreements contain a very general indemnification provision that requires the seller to indemnify the broker in the event that claims are made against the broker in any way related to the property or the broker`s efforts to market the property. While understandable from the broker`s point of view, the seller will not want to be responsible for the behavior of anyone other than his own, and the seller will only want to be liable for his negligent behavior or contrary to or in violation of his obligations under the registration contract. While a broker generally agrees that closing is a condition for paying their commission, the broker may want additional protection by providing in the listing agreement that the broker is entitled to a commission if, instead of selling their property, the seller enters into an “alternative transaction” that goes all the way to closing.
The wording regarding alternative transactions can be very broad, but is intended to protect at least one broker if the seller concludes: a sale of the stake in the company that owns the property; a parcel of land or other lease of the property; an option to put the property; or a joint venture to develop the property. Alternative trading conditions can be complicated and difficult to negotiate, mainly because they are designed to cover many possible contingencies without going into details. For example, while a seller cannot protest against paying a commission if they enter into a long-term lease of the property rather than a sale, the seller will want to know how the broker`s commission for a lease is calculated and when it is payable (e.g.B in the case of the execution or occupation of the lease, or in the case of multiple payments). If the listing contract covers other transactions, the seller and broker may need to spend time thinking about and expanding the most likely alternatives and applicable commission agreements. Many listing contracts require the seller to provide written information about the property, and some require the seller to provide disclosures or representations or warranties regarding the condition of the property. Both provisions could cause problems for the seller. For example, the wording that the seller provides “all documents relating to the property” is too broad and could result in possible liability on the part of the seller if the seller inadvertently fails to disclose the documents in its possession. Such wording could also be interpreted as requiring the seller to provide documents in the possession of its lawyers, engineers or collective societies.
And in the absence of explicit qualification, the Seller may be held liable if any of the documents, including those created by third parties, contain false or inaccurate statements or information. If the broker does not agree to completely remove the seller`s obligation to provide documents, the seller should limit the requirement to the use of “seller`s good faith efforts” to provide documents and provide that the seller`s obligation applies only to documents that are “in the seller`s possession.” The registration contract must also stipulate that the broker must rely on all these documents and their contents at its own risk. As we have already mentioned, there are significant differences in the form and content of registration agreements. Although most registration agreements deal with similar issues, these issues are often treated in very different ways. A seller who intends to be reasonable with their broker is unlikely to have a problem no matter what is included in the listing agreement. Still, the seller can`t predict the future and can`t predict how their relationship with the broker will develop if the trade encounters unexpected bumps. .