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ICSC Legal Database - CasesMonday, February 22, 1999 05:01 PM

Case Index:
00118

Citation:
Allen v. Lindstrom, 237 Va. 489, 379 S.E.2d 450 (1989).

Issue:
Whether a real estate agent owes a duty to a prospective Purchaser to communicate a purchase offer to a

Vendor for whom he was acting as the exclusive agent?

Facts:
Vendors, the Lindstroms, granted Coldwell Banker the exclusive right to sell a parcel of land. The McGowans

submitted an offer for the property, through their real estate agent, to Max R. Rush, an agent working for

Coldwell Banker. Following a flurry of negotiations, the McGowans' agent informed Rush that her clients

accepted the Vendors' counteroffer. Rush failed to transmit this information to the Vendors because the

involvement of Purchaser's agent would decrease Coldwell Banker's commission and bar Rush from collecting

commission as selling agent. Instead, Rush called Edwin H. Allen to inform him of the recent activity as the

Allens had previously been interested in the property. Negotiations between the Allens and the Vendors led to

the execution of a purchase agreement. Subsequently, the Vendors learned that on the night the Allens'

contract was executed, the McGowans were prepared to present a counteroffer with conditions more favorable

than those in the Allen contract. The Vendors dishonored the Allens' contract and notified both parties the lot

would be sold to whomever would pay $72,000. Subsequently, the McGowans executed a contract with the

Vendors. The Allens filed a bill for specific performance of their contract. The McGowans filed a motion for

judgment against Coldwell Banker and Rush for alleged wrongful conduct in failure to transmit to the Vendors

their offer to purchase the property. The trial court denied specific performance of the Allen contract and

dismissed the McGowans' motion. Both parties appeal.

Holding:
Reversed in part, affirmed in part. The trial court erroneously denied specific performance on the grounds that

Rush was acting as the Allens' agent. The record is devoid of credible evidence to support such a determination.

 There was no agreement between the Allens and Rush to establish an agency, the Allens did not possess the

power to control Rush's actions, Mr. Allen testified he did not consider Rush to be his agent, and Rush testified

that he was acting solely for the Vendors. Since Rush was not the Allens' agent, his knowledge cannot be

imputed to them and they cannot be bound by his actions. The McGowans' motion was properly dismissed.

Rush did not owe a duty to the McGowans to communicate their offer to the Vendors. An administrative rule

governing conduct of real estate agents and brokers, requiring prompt tender to the Vendor of every offer to

purchase, does not create a private cause of action in favor of the prospective purchaser against an agent of the

Vendor for whom the agent was acting as the exclusive broker.

Publication:
Legal Update

Date:
Winter 1989

Classification 1:
Contracts

Classification 2:

Classification 3:

00118 - Legal Update - Winter 1989