When Is a Texas Real Estate Broker Entitled to a Commission ?
In Goodwin v. Gunter, the Texas Supreme Court articulated that a broker earns his commission upon procuring a buyer. See Goodwin, 109 Tex. 56, 185 S.W. 295, 296-97 (1916).
The court observed:
It is a general doctrine that in order for a broker to be entitled to commissions under a contract stipulating for their payment in the event of his sale of given property upon stated terms, a purchaser must have been produced through his efforts, ready, able, and willing to buy the property upon the contract terms; otherwise the contract is not fulfilled upon the broker's part and the commissions are therefore not earned.
But the commissions are earned and the broker is entitled to their payment according to the contract if, while it is in force, he procures a purchaser to whom the owner directly makes a sale upon terms which are satisfactory to himself, though different from those limited to the broker and yielding the owner a less amount than that for which the broker was empowered to sell.
This is but a rule of fairness and right.
In such a case the owner receives the full benefit of the broker's effort.
Through the diligence of the broker a buyer is produced.
Having interested a prospective buyer the broker is entitled to a fair opportunity of making a sale to him upon the terms authorized.
That the owner, pending the broker's negotiation, may, in disregard or repudiation of his obligation to respect the broker's right to conclude the transaction, take the matter into his own hands, avail himself of the broker's effort, close a sale upon satisfactory terms, and yet deny the broker's right of compensation, is a proposition not to be countenanced. Id.
Following Goodwin, Texas courts have rejected the contention that a broker's right to a commission hinges on his actual negotiation or continued employment through the time of the final consummation of the sale. See:
Air Cond., Inc. v. Harrison-Wilson-Pearson, 151 Tex. 635, 253 S.W.2d 422, 425 (1952);
Hutchings v. Slemons, 141 Tex. 448, 174 S.W.2d 487, 489 (1943);
Poppe v. Camelot Props., 711 S.W.2d 101, 106 (Tex. App.--Austin 1986, writ ref'd n.r.e.) (holding broker who produced purchaser under listing agreement was entitled to commission where seller sold property to purchaser two days after agreement expired);
Ramesh, 681 S.W.2d at 259 (holding broker's right to a commission cannot be defeated by a modification of a contract by the buyer and seller without the broker's consent, even if the modification extends the time for closing and changes the purchase price or terms of payment);
Morgan v. Letellier, 677 S.W.2d 165, 167 (Tex. App.--Houston [1st Dist.] 1984, writ ref'd n.r.e.) (holding mutual recission by purchaser and owner did not deprive the broker of his commission where parties negotiated a new contract independent of broker). Where the contract is subject to a condition, the broker who negotiated the contract is not entitled to a commission unless the condition is met because he has not performed his agreement to produce a purchaser willing and able to buy on the owner's terms. See Don Drum Real Estate Co. v. Hudson, 465 S.W.2d 409, 411 (Tex. Civ. App.--Dallas 1971, no writ).
Parties to a brokerage agreement may vary the generally applicable rules by express language.
Callaway v. Overholt, 796 S.W.2d 828, 832 (Tex. App.--Austin 1990, writ denied);
Ramesh, 681 S.W.2d at 259;
Morgan, 677 S.W.2d at 167; McCarty v. Brown, 460 S.W.2d 450, 453 (Tex. Civ. App.--Tyler 1970, writ ref'd n.r.e.).
A broker's right to a commission must arise out of some contract, either express or implied in fact or law. See Callaway, 796 S.W.2d at 832.
It is a basic rule of contract law that when a court is called upon to interpret a contract, the court will give plain meaning to the words used in the writing. See City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515, 518-19 (Tex. 1968).
It is the objective intent of the parties as reflected by the entire instrument that controls the meanings of the given words in a contract. See id.
If a contract is so worded that a court may properly give it a certain or definite legal meaning or interpretation, it is not ambiguous. See R&P Enters. v. LaGuarta, Gavrel, & Kirk, Inc., 596 S.W.2d 517, 518-19 (Tex. 1980). Where a contract provision is unambiguous on its face, its construction is a question of law for the court alone. See Pinehurst, 432 S.W.2d at 518; Callaway, 796 S.W.2d at 831.
Because neither party contends the agreement is ambiguous on its face, we construe the contract as a matter of law. Cf. Callaway, 796 S.W.2d at 831.