Do All Owners Need to Sign a Real Estate Listing Agreement? (Corp. Code § 1624(a)(4))

Underwood-Blog-Images-2-1-300x300A realtor should take the necessary legal steps to ensure that all real estate owners do so. When most people buy or sell property, they hire a real estate agent to assist with the process. While the concept of these agreements seems simple enough, these agreements can get complicated when the property in question is owned by more than one person. The Underwood Law Firm is familiar with these disputes and is in the ideal position to assist your dealings with real estate brokers. 

What is Needed for a Real Estate Listing Agreement to be Valid? 

California law provides that an agreement authorizing an agent, broker, or any other person to purchase or sell real estate is “invalid, unless [the agreement], or some note or memorandum thereof, are in writing and subscribed by the party to be charged or the party’s agent.” (Civ. Code § 1624(a)(4).) 

This requirement, commonly referred to as the Statute of Frauds, mandates that these types of contracts be in writing to, as the name suggests, prevent fraud. “By requiring that the specified transactions be in writing and signed by the parties, the statute of frauds avoids the likelihood that permitting oral proof of such transactions would encourage fraudulent claims by swindlers gambling that they can… persuade a jury to enforce a nonexistent oral agreement.” (Estate of Stephens (2002) 28 Cal.4th 665, 679.) 

Generally, before any agreement is signed, the contract should identify all parties necessary to the transaction. Every valid contract in California needs to have four essential elements. (1) The parties must be capable of contracting, (2) the parties must consent to the contract, (3) the contract must have a lawful object (they cannot be for illegal services), and (4) the contract must be supported by consideration. (Civ. Code § 1550.) 

Similarly, Civil Code section 1091 states that “an estate in real property… can be transferred only by operation of law, or by an instrument in writing, subscribed by the party disposing of the same, or by his agent thereunto authorized by writing.” 

In addition, the equal dignities rule (closely related to the statute of frauds) states, “an oral authorization is sufficient for any purpose, except that an authority to enter into a contract required by law to be in writing can only be given by an instrument in writing.” (McGirr v. Gulf Oil Corp. (1974) 41 Cal.App.3d 246, 254; Civ. Code § 2309.) 

Thus, because listing agreements with real estate agents are subject to the statute of frauds and therefore need to be in writing, any separate agreement giving authority to sign must also be in writing. 

Can a realtor sign a sales contract without a complete listing agreement? 

No, not unless there is an agency agreement in writing and compliance with the statute of fraud. 

Because agreements for the sale of property have to be in writing by law, so too must a power of attorney agreement authorizing any third person to contract on one’s behalf. (Civ. Code § 1624(a)(3).) 

Thus, absent an express written authorization from the seller, the broker does not have any authority to enter into a written contract for the sale of a property. (Lynne v. Bonner (1954) 129 Cal.App.2d 743, 746.) Of course, a seller can agree to this, but again, the agreement must be in writing because a sales contract is itself required to be in writing under the statute of frauds. (Civ. Code § 2309.) 

What if a Co-Owner Doesn’t Want to Sign a Real Estate Listing Agreement? 

If a co-owner refuses to consent to list a property for sale, the other owner(s) and agent are left with few options. The owners can attempt to come to an informal resolution resulting in a buyout, where one co-owner receives the other’s interest in the property for a price. 

Or, in certain situations, the co-owner can sell his interest only to a third party. In those situations, the broker does not need the signature of the other owner(s). 

If that fails, however, a partition action may be necessary. A partition action is a court-ordered process where a property owner forces a sale of jointly owned real estate. In California, any co-owner of real or personal property may bring an action for partition. (CCP § 872.210.) Additionally, a co-owner’s ability to seek a partition is absolute as a right. 

Code of Civil Procedure Section 872.710, subdivision (b), states that “partition as to concurrent interests in the property shall be as of right unless barred by a valid waiver.”

If the court determines the co-owner is eligible to partition the property, it will determine the ownership interests of all the co-owners and appoint a partition referee to market and sell the house through a public or private sale. 

Even then, uncooperative owners may still refuse to sign a listing agreement. In these situations, the court will step in. A court’s ruling that a co-owner is entitled to partition acts as a judgment. Thus, a party can file a motion to compel the other party to sign the listing agreement to comply with the court order. 

How can the Attorneys at Underwood Law Firm Assist You? 

Buying or selling property is both exhilarating and stressful. For those doing it for the first time, the process can appear daunting. Mountains of paperwork need to be signed, deals can fall through, and closing a sale can be draining and time-consuming. 

As each case is unique, property owners would be well-served to seek experienced counsel familiar with contracts and brokers. At Underwood Law Firm, P.C., our knowledgeable attorneys are here to help. If you are concerned about signing a listing agreement with an agent, seeking the commission you’ve agreed to pay, or if you just have questions, please do not hesitate to contact our office.

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