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Statute of Frauds Does Not Require Written Contract to Pay for Services of Licensed Real Estate Broker

The Massachusetts Appeals Court has held that the Statute of Frauds does not require that a contract to pay for the services of a licensed real estate broker be in writing, in Huang v. RE/Max Leading Edge, et al.  The Court found that if the broker could prove the existence of the contract and breach, despite the contract not being in writing, the broker could recover a commission on a sale in which the broker was not involved as expectation damages.

Plaintiff Biping Huang alleged that a couple entered an oral agreement with Huang to be their exclusive agent for locating and purchasing a new home as well as selling their existing home following the contemplated purchase. Huang negotiated a potential purchase of a home in Winchester for the couple, but days later the couple agreed to buy a different property through defendant Re/MAX Leading Edge, then sold their existing home using Re/Max as the listing agent. Plaintiff sued, but the case was dismissed on summary judgment by the Superior Court, which found the alleged agreement unenforceable under the Statute of Frauds as it was not reduced to writing.

A divided Appeals Court panel reversed the dismissal of the claims against the couple. The Appeals Court noted that the Statute of Frauds, G.L. c. 259, § 7, includes an express exemption for a “contract to pay compensation for professional services of…a licensed real estate broker or real estate salesman acting in their professional capacity.” The Appeals Court held that, where Huang had alleged, and affirmed in an affidavit, the existence of the agreement, the Statute of Frauds did not prevent trial of the issue, regardless of whether or not Huang would ultimately persuade the trier of fact of the existence of the contract. Accordingly, the Appeals Court reversed the Superior Court, and sent Huang’s claim against the couple for her commission on the purchase of the new home back for trial.

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