Often times with the hustle and bustle of everyday life it is easy to overlook the little things. However, sometimes those little things turn out to be really big things. All too often brokers and real estate agents forget to sign the broker agreements they have with their clients. The common misconception is that so long as the clients sign the agreement, it is enforceable. However, the Arizona Court of Appeals recently made clear that if the broker and/or agent do not sign the broker agreement, it becomes entirely unenforceable. Young v. Rose, 230 Ariz. 433, 286 P.3d 519 (2012).
In Young, a real estate agent (“Young”) sued her clients (“Roses”) for the payment of a commission. There, Young prepared the broker agreement, emailed it to her clients and they promptly signed and emailed the agreement back to her. While Young emailed the Roses to thank them and acknowledge that she had received the agreement, she never actually signed the document. Shortly thereafter, the Roses purchased a multi-million dollar home through the use of another agent. Young sued the Roses seeking the agreed upon commission.
The Superior Court dismissed Young’s claim relying on A.R.S. § 32-2151.02(A) which reads:
All real estate employment agreements shall:
The Court of Appeals upheld the dismissal even though the agreement otherwise compiled with the Statute of Frauds.
Nevertheless, Young contended that she electronically signed the broker agreement when she emailed the Roses to acknowledge her receipt of the signed document. The Appellate Court acknowledged that A.R.S. § 44-7007(D) does provide that an electronic signature “satisfies any law that requires a signature.” However, Young must establish that the parties agreed to conduct the transaction by electronic means pursuant to A.R.S. § 44-7008.
The Appellate Court did not address the issue of whether or not the parties’ use of email to convey the agreement back and forth constituted an agreement to conduct the transaction by electronic means. Nor did the Appellate Court address whether or not Young’s acknowledgment that she had received the signed agreement constituted her acceptance by “electronic signature.” The Appellate Court remanded the case back down to the Superior Court for further determination on these issues. As of this date, the matter is still pending.
The lesson to be learned is that brokers and agents alike should make sure they are physically signing their broker agreements so as to avoid any issues later on down the road.