This problem may be ripe for litigation after the agreement is concluded, so it is important to carefully consider these issues and develop a certain language. For the lawyer, it is important to understand and advise clients on transfer clauses. An expiration clause is a provision of the listing agreement that allows the broker to earn a commission if, upon the expiration of the listing agreement, the property is sold to a person with whom the broker or seller has negotiated or exhibited the property before the listing agreement expires. Minn. Stat. Article 82.66, subparagraph. 1(d) – (s). An expiry clause may not go beyond six months after the expiry of the rental agreement. Minn. Stat. Article 82.66, subparagraph. 1(c).

A broker may not attempt to impose an expiration clause, unless a backup list has been sent to the seller within sixty-two hours of the expiration of the listung contract, in order to provide a backup list for making available. Minn. Stat. Article 82.66, subparagraph. 1, point (d) 1. A protection list is the written list of the names and addresses of interested buyers with whom a broker negotiated the sale or lease of the property or to whom the broker had shown the property before the expiry of the reference contract. Minn. Stat. Article 82.55, subparagraph. 16; Article 82.66, paragraph 1, point (e) The Minnesota Court of Appeals has ruled that a broker is entitled to a commission if the broker was the reason for the sale, even if the sale is concluded after the termination of the reference contract, provided that the broker complies with the expiry clause and the requirements of the safeguard list.

Douglas v. Schuette, 607 N.W.2d 142, 145-6 (Minn. Ct. App. 2000); Lynn Beechler Realty Co. v. Warnygora, 396 N.W.2d 717, 719-20 (Minn. Ct. App. 1986). So take the time to review with your client the expiration clause and requirements of the backup list to ensure that everyone is on the same page with the obligation to pay a commission at the expiration or end of the reference contract.

Mitchel Chargo and Marvin Liszt are shareholders of Bernick Lifson, PA, a full-service business firm in Minneapolis. Mitch and Marvin have over 65 years of experience in commercial real estate. You represent clients in all areas of commercial real estate transactions with significant expertise in the areas of financing, acquisition, development, leasing, sales transactions and property tax claims. Its clients include lenders, borrowers, owners, buyers, developers, home managers, owners and tenants of commercial real estate. The second type of listing agreement is the Net Listing Agreement. In this type of reference contract, a brokerage commission is the amount whose actual purchase price for the property is higher than the price indicated in the reference contract. The Net Listing Agreement implies that the broker is entitled to the commission when the sale is concluded, whether or not the buyer pays the full purchase price to the seller. Stromberg v. Smith, 423 N.W.2d 107, 109 (Minn. Ct. App.

1988). This type of legibility agreement is not often used because of potential conflicts of interest between the seller and the broker. For example, if the fair market value of the property is included in the listing agreement, the broker has no incentive to accept an offer of this amount because the broker does not receive a commission. Most listing agreements require the owner to give some degree of “guarantees” about the property, the condition of the property, the status of the owner, etc. While these provisions may be understandable, legibility agreements are sometimes too broad and painful. . . .