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ORLANDO, Fla. — Florida Realtors® forms include an Exclusive Buyer Brokerage Agreement (EBBA) and Exclusive Right of Sale Listing Agreement (ERS). The EBBA recently had significant modifications, and one of those changes is that it now includes a conditional termination clause that’s much like the one we’ve had for years in the ERS.
The key elements of the conditional termination clause in the EBBA and ERS are as follows:
- The buyer or seller can request a termination.
- It’s up to the broker whether to agree to terminate the agreement or not.
- The clause only mentions conditional termination.
- The buyer or seller will owe a termination fee.
- The buyer or seller may still owe compensation after the agreement is terminated.
Although the EBBA and ERS agreements only mention conditional termination, the accompanying forms that parties can use to terminate the agreement also include an option for unconditional termination. The accompanying forms are called the Modification to Exclusive Buyer Brokerage Agreement/Showing Agreement (MEBBSA) and the Modification to Listing Agreement (MLA).
Based on numerous conversations with members on the Florida Realtors Legal Hotline, brokers routinely honor a request to terminate. When they do, they’ll need to decide which type of termination makes the most sense under the circumstances:
- Conditional Termination. This termination fits parties who are no longer interested in buying or selling, and plan to halt their activities until after the EBBA or ERS timelines expire. The parties will need to negotiate a future date when the buyer or seller are free to resume their activities. The clause is identical in the MEBBSA and MLA and provides, “The parties agree to conditionally terminate the Agreement. Consumer will pay the agreed upon cancellation fee and the conditional termination date will be .”
Although the broker doesn’t have to offer services after a conditional termination, full compensation would be due if a buyer or seller enter into a purchase and sale agreement. In the case of a seller, they will also owe compensation if they convey the property (i.e. sign a deed) without signing a contract.
- Unconditional Termination. This termination fits parties who want to make a clean break and move on. Immediately after an unconditional termination, a buyer or seller could enter a new EBBA or ERS with a different brokerage firm. Under unconditional termination, both sides agree to powerful release language, as they release each other from “all obligations under the Agreement and…any and all claims and actions arising from or related to the Agreement.”
Joel Maxson is Associate General Counsel
Note: Information deemed accurate on date of publication
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