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A South Carolina appellate court has considered whether a broker had a right to collect commission even though the buyer did not meet its payment obligations to the seller.
AAG, Inc. (“Seller”) listed for sale land that it owned with Springs and Davenport, Inc. d/b/a H.B. Springs, Co. (“Broker”). The Broker located a buyer for the property, and Bill Clark Homes (“Buyer”) submitted an offer to purchase the land.
The parties entered into an agreement requiring the Buyer to pay the Seller approximately a third of the price at closing and execute a promissory note (“Note”) for the remainder, with two payments being made over the next two years. At the time the promissory was executed, the Seller and the Broker agreed that the Broker would receive a specific sum at closing and thereafter a percentage of all additional amounts collected from the Buyer, capped at a certain amount.
The Buyer defaulted on its first payment and the Seller foreclosed on the property. The Seller reacquired the property from foreclosure and received a judgment against the Buyer for the unpaid amounts of the Note. When the Seller brought another action against the Buyer seeking to recover the unpaid amounts, the parties renegotiated the sale terms. The Buyer made a lump sum payment to the Seller, and the Seller transferred the property back to the Buyer and released its claims against the Buyer. No additional compensation was paid to the Broker.
The Broker filed a lawsuit against the Seller, seeking a commission from the lump sum payment made by the Buyer. The Seller argued that the commission agreement involving the Note constituted a modification of the original commission. The trial court disagreed and ruled that the Broker was entitled to recover a commission from the lump sum payment. The Seller appealed.
The State of South Carolina Court of Appeals affirmed the lower court’s award to the Broker. The question before the court was whether the Broker’s original listing agreement had been modified when the Broker agreed to an altered payment schedule from the Note payments. Under the original listing agreement, the Broker was entitled to the full commission amount once the Buyer had signed the purchase agreement. By agreeing to accept payments as the Seller received payments from the Buyer, the Seller argued that the listing agreement had been modified.
The court ruled that the parties had not modified the listing agreement. Nothing in the letter agreement stated that the parties were modifying the listing agreement nor that the Broker would only receive commission payments when the Buyer paid the Seller. The court also found that the Broker already had already earned the full commission, as the Broker had satisfied its contractual duties required to receive a commission. Therefore, the court ruled that the Broker had simply altered the timing of commission payments and did not condition its commission payments on the Seller being paid by the Buyer. The court affirmed the ruling by the trial court.
Springs & Davenport, Inc. d/b/a H.B. Springs, Co. v. AAG, Inc., 683 S.E.2d 814 (S.C. Ct. App. 2009)