Dear Forms Committee: A buyer has signed an exclusive Buyer Representation Agreement with agent 1 for one year and does not formally terminate the agreement…

A buyer has signed an exclusive Buyer Representation Agreement with agent 1 for one year and does not formally terminate the agreement. Five months into the agreement, the buyer signs a new exclusive Buyer Representation Agreement with agent 2 and goes under contract on a property with agent 2.  Is the buyer obligated to pay two commissions? Or does the first signed agreement take precedence?

The answer is not simple. It boils down to this: do your due diligence before signing with a buyer and stay close to your client after signing.

According to the NAR Standard of Practice:

(a) agents must not enter into agreements with buyers who are already parties to exclusive agreements (Standard of Practice 16-5), and

(b) before entering into a representation agreement with a client, Realtors® have an affirmative obligation to make reasonable efforts to determine whether the prospect is subject to a current, valid exclusive agreement to provide the same type of real estate service. (Standard of Practice 16-9)

In a commission dispute, the second agent would have the burden of proving that they did their due diligence. If the second agent didn’t check into whether there was an existing agreement – or had reason to believe that there was one – that would be compelling evidence for a judge or arbitrator to decide in the first agent’s favor, since the agent has a duty to act in the client’s best interest: signing an agreement knowing the client already had one would be a breach of the agent’s duty. 

If the buyer lied or forgot about the first agreement, then Oregon contract law answers this question. Oregon contract law would examine both agreements and determine whether they are binding. If the buyer lied, the contract would likely be void, and the buyer’s agent could pursue the buyer for damages (the agreed-upon compensation).  If the buyer forgot, you might have two valid representation agreements, with the buyer responsible for both. In order to qualify for compensation, the agents would have to show that they fulfilled the terms of their representation agreement, and it is possible that both agents would prevail. However, it is more likely that one agent did not fulfill all the terms of the agreement. Agents who have questions about this should contact their principal brokers.

All comments and responses from OREF or its staff, managers, and volunteers are non-legal opinions made for general purposes. Each Forms subscriber must rely solely upon their Principal broker or personal legal counsel for specific advice and instruction. You and your client should independently confirm that the Form(s) you use are legally suitable for the purposes intended and that they are current with respect to all laws and regulations.