Expert: Jessica Bryan - 7/26/2007

Question
Hello-
We are currently under contract with a realtor until 9/15/07.  At an open
house, our realtor met a couple interested in our home.  We have never met
them or heard of them.  An old neighbor just called and said he knows them,
and this couple would like to do a "Rent to Purchase" deal with us (they are
not working with a realtor).  If we decided to go this route, can we do so while
under contract with our realtor?  Our contract states that "A brokerage fee
shall be paid if this property is sold, conveyed, or otherwise transferred
within 90 days after the termination of the agreement".  Does this also include
renting?  Will we have to pay commission for 90 days regardless, even if we
wait until September?  Thank you so much for your thoughts.

Answer
Hi Paul;
You can check with an attorney to be absolutely sure (since your contract may or may not be binding.  Only an attorney can advise on legality of the contract.)  

However, in most contracts, the listing agreement will hold and the conveyance of property will necessitate that the commission be paid to the agent.  With a lease to own situation, it is basically a delayed sale.  Another way of looking at it is that you have sold the home but delayed the closing.  The contract you write with the Buyers/renters will or should have verbiage that covers what happens if they default and don't purchase the home.  There should be a non-refundable security deposit, a time period that will set a date for closing that should be "no later than..." and a purchase price for the home.  Your agent should help you with the paperwork and the advice on setting this up and then recording the contract so it is enforceable.  You should also visit an attorney to make sure that you are legally protected and that the agreement is done correctly.

Your agent may not receive the commission until the people go through with the purchase, but the agent may be entitled to a small portion of payment on the lease.  This is something that you can discuss with the agent and also check with the attorney if there has been no pre-agreement.  

Good luck and best wishes,
Jessica Bryan