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An Illinois court has considered whether a tenant's purchase of property following expiration of listing agreement triggered a seller's obligation to pay a commission to listing broker.
Dana Cryder ("Cryder") inherited a one-half interest in a 320 acre parcel of argircultaral land ("Farm"). The co-owner of the Farm was Mary Moss ("Moss"), and Moss told Cryder that she had no interest in selling her interest in the Farm. Cryder asked the Farm's tenant, Kirk Friestad ("Tenant"), if he was interested in purchasing his share of the Farm. The Tenant said he was, but didn't think he could afford to purchase the Farm.
In July of 1996, Cryder listed the property for sale with Joanne Gretencord ("Broker"), with Richard Olson ("Listing Agent") serving as listing agent. The listing agreement gave the Broker an exclusive right to sell the property for three months, and obligated Cryder to refer all prospective purchasers or inquiring brokers to the Listing Agent. During the term of the listing agreement, the Listing Agent obtained one offer for the entire Farm, but Moss declined to sell her half of the Farm. The Listing Agent had one conversation with the Tenant about the Farm, during which the Tenant told the Listing Agent that he could not afford to buy Cryder's half of the property. The Listing Agent had contacted the Tenant about his potential interest following the Tenant's contact with the potential purchaser of the property obtained by the Listing Agent. Cryder never informed the Listing Agent that the Tenant was a prospective purchaser.
Following the expiration of the listing agreement, Cryder asked his attorney if he could sell his half of the Farm to the Tenant without paying a commission. The attorney informed him that if the Listing Agent had not shown the property to the Tenant, Cryder would not owe a commission. The Tenant proceeded to make an offer for the Tenant's half of the Farm, which Cryder accepted. Moss also agreed to divide the Farm in half. The Tenant and Cryder both admitted that they had discussions about the Tenant's purchasing his half of the Farm during the term of the listing agreement. Cryder did not pay the Broker a commission from the sale to the Tenant, and the Broker filed a lawsuit seeking payment of the commission. The trial court awarded the commission to the Broker, and Cryder appealed.
The Appellate Court of Illinois, Third District, affirmed the award of the trial court. The court found that the evidence established that the Tenant was a "prospective purchaser" within the meaning of the listing agreement, and so Cryder had a duty to refer the Tenant to the Listing Agent. The court found that the duty to pay commission was not extinguished by the Listing Agent's failure to show the Tenant the property, as the Tenant farmed the property and so was familiar with the property. The court found that Cryder had breached the listing agreement by failing to inform the Listing Agent that the Tenant was a "prospective purchaser" of the Farm. Because of this breach, the court ruled that the trial court had properly awarded the commission amount to the Broker. Thus, the trial court's award to the Broker was affirmed.
Gretencord v. Cryder, 784 N.E.2d 384 (Ill. App. Ct. 2003).