[jill siela]

A licensee takes an oral listing on a property, there is no written contract. Payment of a commission under this contract would it be prohibited bt Federal law or by State law.

[Fr_Chuck]

Class work, it sounds like you are in a real estate license course.

Let me ask you some questions, who makes the laws for real estate transfers

Who makes the laws about the rules of license.

And also why, real estate contracts specificly are noted as requiring to be in writing, normally with varios forms and requirements.
** who can require additional notices and forms ( this may not be the same person as makes the specific laws for your area

[LisaB4657]

Payment is not "prohibited" by any law. However, the obligation to pay may or may not be enforceable. Sounds like a homework assignment. Tell us what you think the answer is, and why, and we'll tell you if we think you're right.

:D

[Fr_Chuck]

Lisa, actually in some states it may be prohibited, to explain and of course give him an answer, states have specific rules that require real estate contracts to be in writing, there can not be a legal sale of property in those states without a written contract, therefore a payment under some states law of such would be prohibited ( because the entire contract is)

It varies from different federal requirements of notification, lead paint and the such

[LisaB4657]

Chuck, something I learned all the way back in Contracts class in my first year of law school is that no contract, written or verbal, is illegal unless it contemplates one or both of the parties committing a crime.

The contract may not be enforceable but it is not illegal. And it is not prohibited to have a sale of property without a written contract in any state. A buyer and seller who are in agreement can transfer property between themselves and record a valid deed.

The enforceability issue arises when one of the parties claims that the other party is not performing according to the agreement. If the agreement is not in writing then it is rare that it will be enforced.

[Fr_Chuck]

It is in the wording of the real esate law, when we took the real estate licensing course in TN, that was one of the first parts of the class, there can not be a sale of real estate on verbal contract. Rental is OK, but on sale, it has to be in writing, it is not allowed to be verbal.

In fact the Real Estate Fundamental by Bearborn Real estate, general study book for real estate note on page 94 That state laws in most states stipulate that real estate contracts must be in writing.

The restrict the rules of contracts on real estate. So general contract laws do not apply because of specific restrictions put on them by state law.

It falls under the statue of frauds of most states where no action may be brought on any ontract for the sale of land unless the contract is in writing.

Second rule of first year law school, there are normally exceptions to every rule you learn. Although I don't practice don' forget I went to law school also.

[LisaB4657]

Chuck, are you telling me that a county clerk or county register will not accept a deed for recording unless they are shown a fully-signed contract?

Your real estate course did not make the distinction between prohibited and unenforceable. Verbal contracts are not prohibited by any law, be it federal, state or common. Verbal contracts in certain situations are not enforceable, particularly in the case of real estate. But they are most certainly not prohibited.

[Fr_Chuck]

While of course the deed can be recorded, but they are specificly prohibited, so any real esate agent doing one can lose their license. The laws refer to that of a licensed real estate agent.

A verbal agreement can be used to estabish an agency agrement and upheld in court, but a real estate agent or broker that would allow a verbal sale is subject to various levels of punishment by the state board.

So they are specificly prohibited,

[LisaB4657]

Umm... I think I see the area of our disagreement now. Are you talking about verbal agreements being prohibited strictly for real estate agents? Or in general?

I was assuming that you were talking about contracts in general. If that's the case then I must stick with my position that verbal real estate contracts are usually unenforceable but not prohibited.

If you're talking about real estate agents making verbal contracts then I will agree that payment of a commission is probably prohibited by most laws regulating licensing of real estate agents.

[Fr_Chuck]

By real estate agents, the question was obviously from a real estate course. You and some other person can agree to sell your home. And do it on a hand shake. Now that is not enforceable by state law, so either party can break it up till the point that the sale is over. But a real estate agent and broker can not.

Even if I was selling my own perosnal property, there are restrictions as to my notification that I am a real estate agent. ( even though I don't actually sell for anyone) just because I am licensed.

The other part as you mentioned is that for those that do it, it is not enforceable, while normally verbal contracts can be enforced on other things

[oneguyinohio]

I assume then that collecting the commission, if it is prohibited by law, would be prohibited by state law, since the state is the entity that issues the license. The actual contract between a seller and a real estate licensee, is not the same as the contract between buyer and seller of real estate.

[Fr_Chuck]

Yes, I have no idea of every state law, esp with LA, CA and NY where there are so many speicial laws.

But real estate law in general is state law, there are a lot of Federal mandates and lending laws and notification laws that effect the sale.
For example a sale done without certain notifications, lead paint or urea formaldehyde plumbing on homes over certain dates, have to made, and those are federal laws but the majority of the actual sale are state.

So even if a private seller is selling a home built before 1978, they are required by federal law to give written notification of lead paint on any home sell or even rent. So if there is a landlord out there with a older home, they are braking the law if they do not give a lead paint disclosure and pamphlet to the renter or buying

A real estate agent is not allowed to do the sell without these.
The law does not require an inspection, only notification.

Also the buyer must be given at least 10 days to do a lead paint inspecton.