What would happen to the broker's commission in a situation in which the property was damaged by fire after the sales contract was entered into, but before the transaction closed? Suppose that the sales contract provided that the seller was to carry the

Question

risk of loss between the time of the contract for sale and closing, and that the insurer was obligated to pay for the damages caused by the fire. Suppose further that after inspecting the property, the buyer opts to exercise his right to terminate the purchase contract on the grounds that the property could not be delivered in substantially the same condition as it was when the contract was signed. Does this fit into a "ready, willing, and able buyer" situation in which the broker delivered the buyer, but the closing did not occur? Or would it be that the buyer was no longer willing? Do we measure from the time the contract is entered into or do we measure from the time of the closing?

Answer 1

The court held that the real estate agent was not entitled to commission from purchaser because the contract provided the right to rescind and if the buyer can rescind, the broker has not produced a buyer who was ready, willing, and able. Also, the court held that the vendor was not entitled to recover purchaser's deposit because the situation was one of mutual rescission under terms provided for in the agreement.