CONTRACTS 3: A contract provision providing for a shortened period of limitations is enforceable.

Plaintiffs owned a house in Michigan. On April 15, 2015, they entered into a one-year listing agreement with defendant, a licensed real estate broker to sell their house in exchange for a 5% sales commission. The house initially listed for $999,000.

In May 2015, a buyer made an initial offer of $910,000 through a real estate agent. Plaintiffs countered through Defendant with an offer to sell the home for $965,000, which the buyer rejected. The same buyer later made another offer, this time for $938,000. Plaintiffs countered with an offer to sell for $957,000, which the buyer rejected by failing to respond within the period specified.

According to plaintiffs, they learned on or about June 2, 2015, that the buyer had scheduled another walk through of the property. Also on June 2, that buyer’s agent allegedly informed Defendant verbally that the buyer intended to offer $950,000 for the property, but Defendant told buyer’s agent that plaintiffs had no interest in continuing to communicate with the Buyer. After the walk through, buyer’s agent purportedly telephoned Defendant with the $950,000 cash offer and followed up the phone call with a written offer via e-mail.

Defendant contends that buyer’s agent did not telephone Defendant with an offer, and asserts that Defendant did not see the written offer attached to buyer’s agent June 2, 2015 email. However, it is undisputed that Defendant did not relay the $950,000 offer to plaintiffs. The offer expired and the buyer purchased a different house in the area. Plaintiffs claim that they learned about the $950,000 cash offer weeks later through a phone call with a different agent.

The only other offer for the house prior to expiration of the listing agreement with Defendant came in September 2015 and was for $810,000. After the listing agreement expired on April 15, 2016, plaintiffs elected not to renew the agreement with Defendant; instead, they engaged a different agent, who eventually sold the house for $840,000.

On December 22, 2016, plaintiffs commenced an action to recover damages for the lost sale. They alleged breach of contract, breach of fiduciary duty, fraudulent misrepresentation, silent fraud, entitlement to exemplary damages, and other claims.

Defendants filed an answer, followed ten days later by a motion and supporting brief for summary disposition. They argued that plaintiffs’ claims were barred by the listing agreement, which provides for a shortened limitations period as follows: LIMITATION: Seller and Brokerage Firm agree that any and all claims or lawsuits between the parties relating to this agreement must be filed no more than six (6) months after the date of termination of this agreement. The parties waive any statute of limitations to the contrary. The listing agreement expired on April 15, 2016; accordingly, the limitation period expired six months later, on October 15, 2016.

The main goal in interpreting a contract is to honor the parties’ intent as discerned from the words used in the contract. An unambiguous contractual provision providing for a shortened period of limitations is to be enforced as written unless the provision would violate law or public policy.

Trial court enforced the contractually shortened period of limitations by granting defendants’ motion for summary disposition.

Finding the right attorney to assist with the purchase, sale or acquisition of real estate is critical.

Whether you are buying or selling a home or you are involved in a commercial real estate transaction, an experienced real estate attorney can make a world of difference.

We assist our clients in a wide range of real estate transactions, including:

  • Home purchases and sales
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  • Home closings
  • Land contracts
  • Draft of real estate deeds, including quit claim deeds

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