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Real Estate Broker Contracts

Generally, for a real estate broker to be entitled to a commission in Missouri, the broker must prove that he/she/it was the efficient or procuring cause of a sale and that an employment relationship existed between itself and the seller. Kohn v. Cohn, 567 S.W.2d 441, 446 (Mo. Ct. App. 1978). Note that both elements — a contract and procurement of  a sale — must be present. Without a contract between the broker and seller, the owner is not obligated to pay a commission, even if the broker was the efficient cause of a sale. Kohn, 567 S.W.2d at 446; Ham v. Morris, 711 S.W.2d 187, 190 (Mo. 1986). Accordingly, if there is a dispute over a broker’s compensation, both items would need to be present if a broker pursues a breach of contract action (there could, however, be an argument to be made for unjust enrichment or quantum meruit). 

Who or what constitutes a “broker” is not always immediately clear.  At least one Missouri case has discussed the confusion when trying to differentiate between a broker and sub-agent. However, that case rejected the argument from the broker that it was a sub-agent entitled to compensation because there was no contract, express or implied, with the party. Accordingly, a real estate broker would do well to ensure that there is a written contract in place. It is not only good practice, but is often a substantive legal requirement.

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