MAR Successfully Defends Buyer Agency

Thanks to effort by the legal team at the Massachusetts Association of REALTORS, on February 2nd, 2023, the state’s highest court issued its decision in Biping Huang vs. Jin Ma, a case with significant implications for the practice of real estate. The decision was in-line with a brief MAR filed that explained standard real estate practices and defended a buyer agent’s right to receive their commission when their clients breached an exclusive agency agreement.  While details are below, we will be anxious to hear from the MAR attorneys at our Legal Breakfast to learn about any expected increased in the use of written buyer agency agreements or updated best practices.

What’s the case about? 

In the case, real estate broker Biping Huang alleged that her former clients breached an oral exclusive buyer’s agency agreement by purchasing a home with another agent. The appeals court struggled with whether Huang was entitled to her commission. Both a majority and dissenting opinion (an opinion written by an appellate judge or Supreme Court Justice who disagrees with the majority opinion in a given case) discussed at-length whether there should be a “clear statement rule” requiring the contract to state that a commission would be owed upon a breach of the agreement. The Massachusetts Supreme Judicial Court accepted the case to ultimately decide what remedy should be available to the broker. 

Why did MAR get involved? 

The case presented two serious concerns for real estate and REALTORS®: 

  1. Requiring a “clear statement rule” would upend current contracting norms. 
  2. The case could also have introduced unreasonable limitations on what damages REALTORS® could seek when exclusive agency agreements were breached. 

How did MAR protect REALTORS®? 

MAR filed a “friend of the court” brief, explaining industry norms. MAR argued that this dispute, like any other contract dispute, should be handled under long-established rules entitling the aggrieved party (in this case broker Huang) to the benefit of their bargain. In this case, because the homebuyers breached an exclusive buyer agency agreement, Huang’s could rightfully be entitled to the commission she would have received had the homebuyers not broken the agreement. Read the full MAR amicus here. 

What did the Court decide?   

MAR’s brief played a significant role both in oral argument, where it was debated at length and quoted by justices (watch argument here), and in the final decision, where it is both cited and quoted (read the full decision here). The Massachusetts Supreme Judicial Court held in-line with MAR’s arguments that there was no need for a “clear statement” rule and that in the situation at hand, the broker could be entitled to their commission as damages for the homebuyers’ breach of the exclusive agency agreement.