A New Jersey court has considered whether an exclusive listing agreement was invalid because it did not expire on a specific calendar date.
Renay Salamon ("Broker") was a licensed real estate broker in New Jersey and the principal owner of Liberty Realty, Inc. ("Brokerage"). The Broker and her family owned a large tract undeveloped farmland. In 1986, the Broker's family decided to sell 75% of the land as part of a package with land owned by four neighbors to Memi Reina Financial Services Realty Corporation, whose ownership interest was ultimately assumed by Illva Saronno Corporation (collectively, "Owner"). The Owner and the Broker signed an agreement setting forth the Owner's intent to purchase the property as well as a plan for the Owner to purchase at a later time the other 25% of the land retained by Broker's family. The agreement also granted the Brokerage an exclusive listing for the Owner's property, setting forth varying commission rates that the Brokerage would receive, depending on whether the land was sold as undeveloped or developed property and also whether a cooperating broker was involved in the sale transaction. The agreement stated that the listing agreement would remain in effect "for a period to end ten (10) years after the first final approval of the [local] Planning Board...or two years beyond the end of any governmentally imposed construction schedule, whichever is longer."
In 1997, the Owner filed a lawsuit seeking a judicial declaration of each party's rights under the listing agreement. At that time, the Owner had still not attempted to obtain approval for its development plans. The Owner was seeking to have the court invalidate or reform the listing agreement. The trial court ruled that the listing agreement was valid, and the Owner appealed.
The Superior Court of New Jersey, Appellate Division, affirmed the rulings of the trial court. The court considered the Owner's challenge to the listing agreement. The Owner argued that the listing agreement was invalid under New Jersey law because the listing agreement failed to specify a termination date. In New Jersey, the Real Estate Commission has the power to revoke the license of a broker who fails to state in an exclusive listing "a definite terminal date which terminal date shall not be subject to any qualifying terms or conditions." The court ruled that this language does not require a New Jersey licensee to set forth a specific calendar date for termination of the agreement. Looking at this agreement specifically, the court found that the agreement was extensively negotiated and both parties were represented by attorneys during the negotiations. Further, the court found that the language in the listing agreement was not vague, as it established a specific time when the agreement would terminate. The court also determined the Brokerage had meet its obligations under the agreement and that it would be unfair to punish the Brokerage for the Owner's failure to seek the appropriate licensing for the project. Therefore, the court affirmed the trial court's ruling that the listing agreement was valid and enforceable.
Illva Saronno Corp. v. Liberty Hill Realty, Inc., 782 A.2d 473 (N.J. Super. Ct. App. Div. 2001).