LEGAL HOTLINE ARCHIVE
Contingent Sales

Q. Question 1: [Purchaser] A has a signed purchase agreement with seller B to purchase 5 lots.

Realtor C represents seller B.

Realtor D represents purchaser A.

[Purchaser] A wishes to sell 2 of these 5 lots.

May Realtor D offer these 2 lots for sale prior to [purchaser] A having an act of sale with [seller] B?

Must Realtor D get the permission of seller B and/or Realtor C to offer these 2 lots for sale with a sign on the property prior to the act of sale from [seller] B to [purchaser] A?

Must Realtor D have the permission of seller B and/or Realtor C to advertise these lots for sale in the newspaper prior to the act of sale from [seller] B to [purchaser] A?

May Realtor B obtain a listing prior to the act of sale to sell the lots beginning any time after the act of sale?

Our Realtor Standard of Practice 12-7 states that a broker may post a "sold" sign prior to closing only with the consent of the listing broker. It does not cover a "For Sale" sign.

Does Number 11 under section 1455 of our License Law cover these questions?

Question 2: Can E obtain an option to buy F’s property and sell F’s property to G prior to the sale from F to E?

Question 3: Can E negotiate a purchase agreement from F and sell that purchase agreement to G?

A. Question 1: Louisiana does recognize contracts to sell which contain contingencies such as after-acquired title to the property, i.e., if A acquires the property from B, then A sells the property to C. This type of arrangement causes particular concern for realtors in marketing property for A prior to A’s acquisition of the property. Chapter 25, Section 2503 of the Louisiana Real Estate Rules and Regulations provides:

No broker or licensee sponsored by said broker shall in any way advertise property belonging to other persons as being for sale, or rent, or place a sign on any such property offering the property for sale or rent without first obtaining the written authorization to do so by all owners of the property or their authorized attorney in fact.

Further, as you point out in the hypothetical, failure to obtain the permission of all owners prior to marketing property may be a cause for censure, suspension or revocation of the license of the realtor. The most conservative view of this hypothetical presented is that Realtor D must obtain the consent of owner B and Realtor C to offer any after-acquired lots by purchaser A for sale. Even if the necessary permission to market the property is obtained, any advertisement on A’s behalf would clearly need to disclose A does not own the property. We have spoken with the Louisiana Real Estate Commission, who concurs that the current owner’s (seller B’s) permission must be obtained for Realtor D to market the property prior to purchaser A purchasing the property.

In response to the second part of this hypothetical, Realtor D may obtain a listing of the property contingent upon A’s acquisition of the property. The listing agreement must state it will become effective after A acquires the property.

Question 2: We are somewhat unclear on the question. The terms and conditions of the option may include that the option to purchase the real estate is transferable or assignable. If the option provides that the potential buyer may transfer the option to purchase the real estate to any other party, then generally the courts will enforce this provision. If the option does not clearly provide that it is transferable, generally the courts will not recognize a transfer of same.

Question 3: Again, this will depend on the exact wording of the purchase agreement contract. A purchase agreement may be transferable if it is clearly designated in the purchase agreement that it may be transferred or assigned.

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