The Lawletter Vol 42 No 3
A real estate owner's contract with a realtor may be required to be in writing and signed by the owner in order to satisfy the statute of frauds. As in many States, that is certainly the rule in California. As the California Supreme Court stated nearly 30 years ago, "[a] broker's real estate commissions agreement is invalid . . . unless the agreement or some note or memorandum thereof, is in writing and subscribed by the party to be charged or by the party's agent." Phillippe v. Shapell Indus., 43 Cal. 3d 1247, 1258, 743 P.2d 1279, 1283 (1987) (internal quotation marks omitted).
But, what happens when there is more than one owner of the property (co-owners) and only one of the owners signs the broker's contract? Is that contract biding on the nonsigning co-owner? Recently, in Jacobs v. Locatelli, 8 Cal. App. 5th 317, 213 Cal. Rptr. 3d 514 (2017), the court wrestled with this exact issue.In that case, only one of the co-owners of a parcel of vacant land signed the broker's listing agreement giving the broker the exclusive right to sell the property for one year and providing for a $200,000 commission. The other co-owners, and there may have been at least five other owners, did not sign the agreement. The broker found a purchaser for the property and then sought his commission from each of the co-owners. When the owners refused to comply with the broker's demands, the broker sued for a breach of the listing agreement. The court held that the agreement was binding on all of the owners and did not violate the statute of frauds. The co-owner who actually signed the contract had a written agency agreement authorizing him to act on behalf of the other co-owners. Moreover, the court emphasized that two of the non-signing co-owners treated the broker as their broker after the agreement was signed.
As the result in Jacobs demonstrates, whether or not a non-signing co-owner is bound by a contract dealing with the property and executed by another co-owner, and whether that contract is sufficient under the statute of frauds, may very well turn on agency principles. If the signing co-owner had the authority (express or implied) to sign for the other owners, these owners may be bound by the agreement.