Legal Lines: April 2020

Question: I have some confusion about the purpose and the need for GAR Form 155 Unilateral Termination of Brokerage Engagement Agreement. Neither the Listing Agreements nor the Buyer Brokerage Agreements specify a unilateral right to terminate for either party. Can you clarify that?
Answer: Our brokerage agreements do not provide language for it to be terminated. However, any contract can always be terminated and the client in that instance would then be liable for breaching the contract.  The broker and the client can also always mutually agree to terminate the brokerage agreement and if the parties mutually agree to terminate, then the broker may gives up his/her claim to a commission.
GAR prepared a unilateral termination form which is intended as nothing more than a confirmation that the client is firing the broker, terminating the contract and accepting responsibility for breaching the contract. GAR also prepared a mutual termination agreement to cover a situation where both parties are consenting to the termination and the listing broker may give up his/her commission rights.  These forms were prepared to avoid what had been a common situation where it appeared the broker was consenting to the termination and inadvertently giving up its commission rights.
In our Legal Lines column, we feature a question from GAR’s Legal Helpline each month. Answers to these questions are provided by GAR General Counsel, Seth Weissman. Questions and answers are edited for brevity and clarity. Click here to learn more about our Legal Helpline or to submit a question.