Be careful canceling listing, selling to family

Q: If you have a piece of property listed with a real estate agent and you decide you don't want to sell it before the listing period is up, do you have the right to cancel your listing and take it back off the market?

If so, what happens if you sell in a few months to a family member who never saw the property while it was listed? Can the agent come back and demand money or sue you?

A: The real issue here is what your listing agreement says about your right to withdraw a property from the marketplace?

You might have to review the document with a real estate attorney to determine if you have the right to cancel the agreement, and under what conditions. If the real estate agent has performed his or her end of the agreement, you generally would not be able to unilaterally terminate the agreement.

Most sellers never take a close look at the listing agreement the agent presents for signature before listing a property. That's unfortunate, because the listing agreement sets up the terms and conditions for the listing, including how much commission the seller will pay, how long the listing will be, whether the seller can take the property off the market, and how much, if anything, the seller will owe the broker if this occurs.

A new term added to some listing agreements over the past few years is how much you'll pay for the listing company to process your sale when the contract comes in. These fees can run several hundred dollars on top of the commission you pay.

On some listing agreements, sellers agree to reimburse the agent for any out-of-pocket expenses incurred if the listing is withdrawn. On many listing agreements, sellers agree to pay a commission if the property is withdrawn but sold within a specified period of time to someone who saw the property while it was listed.

Other agreements will require a homeowner to pay a commission if the property is sold within a certain period of time after the end of the listing agreement no matter who buys it unless the property is sold using another real estate company.

In many instances, if you withdraw the listing and someone who didn't see the property while it was listed purchases it, the agent would be out of luck and not entitled to any commission. Again, it depends on the terms of the listing agreement.

In general, if the seller cancels the listing to switch the property over to another agent, often there is no other fee or commission owed to the agent who originally listed the property. But this exception is spelled out in the agreement.

To understand what your rights are, you must go back to your listing agreement and figure out what it says. A real estate attorney can help make this easier for you.

If it turns out that you may owe a commission to the agent, you and your attorney should figure out what you want to do. This may involve a call to the agent or the agent's managing broker.

By the way, this is one great reason why it's important to have an independent real estate attorney help you with your deal. You should find a real estate attorney before the process even begins, so that he or she can help you with all of the documentation in the purchase or sale of property, starting with the agency representation agreement and listing agreement.

One final thought: Given the current state of the real estate market you may find that your current real estate agent might be quite willing to terminate the listing agreement early. Not all real estate agents would agree, but some might want to focus their efforts with motivated and eager sellers and wait until later to work with a seller who might not be as eager to sell his or her home.

Q: My husband and I recently built a new home in a planned community. We questioned how the house next to ours would be set prior to signing a purchase agreement. We received a plot plan with the proposed house outlined on the lot and even signed it.

That lot has recently sold and now the builder is trying to set the house in a completely different direction. Had we known that we would not have purchased this particular lot. We're just curious as to how far we can take this.

A: It's unfortunate that the builder and you have a misunderstanding of what could occur with the lot next door. It sure would have been nice to know this ahead of time.

Did you and the developer sign a document that would require the home on the lot next-door be placed in a certain manner? Was the "plot plan" document you signed merely a document to indicate the location of your lot or did it provide assurances about the way any future homes would be built on adjoining lots?

You should speak to a real estate attorney who can look over your contract and advise you as to your legal rights. If a real estate attorney originally represented you in this transaction, please call him or her to pick up the negotiations.

This might be a case where a simple call from your real estate attorney to the builder, along with a copy of the signed plot plan might be enough to jog the builder's memory and encourage him or her to do the right thing.

To get even more valuable advice from Ilyce, visit her Personal Finance and Real Estate Center.

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