ISSUE:

The seller and the listing broker execute a listing agreement for the sale of a home. Shortly thereafter the seller files bankruptcy. If the home sells during the bankruptcy, will the listing broker be entitled to a commission?

ANSWER:

The bankruptcy court must approve both the sale of the home and any listing agreement. Therefore, the listing broker should request approval by the bankruptcy court of the listing agreement. If the bankruptcy court approves the listing agreement, the listing broker will be paid a commission when the home sells.