## Facts

- The defendants (property owners) hired the plaintiff, a licensed real estate broker, to sell their real property under a listing agreement.
- The listing agreement set a sale price of $349,700 and provided for a 7% broker commission upon sale.
- The broker produced a prospective buyer who made an offer of $251,680.
- The defendants accepted the offer, and the defendants and buyer executed a written purchase agreement.
- The purchase agreement required $5,000 in earnest money and stated that, if the buyer failed to complete the purchase, the earnest money would be treated as liquidated damages.
- The purchase agreement also stated a broker commission amount of $17,617.60.
- Before closing, the buyer refused to perform because he was financially unable to pay the agreed price.
- The transaction did not close, and the defendants did not sell the property through that deal; the defendants were entitled, at most, to the $5,000 earnest-money liquidated damages.
- The broker demanded the $17,617.60 commission and sued the defendants when they refused to pay.
- The district court granted summary judgment for the defendants, and the broker appealed to the Nebraska Supreme Court.

## Issues

1. Whether a real estate broker is entitled to a commission when the broker procures a buyer who signs a purchase agreement but is financially unable to complete the purchase and the sale is never consummated.

## Decision

- The Nebraska Supreme Court affirmed the district court’s summary judgment for the defendants.
- The court held the broker did not earn a commission because the buyer was not “ready, able, and willing” to purchase on terms acceptable to the sellers, given the buyer’s financial inability to perform.
- The court rejected the broker’s position that the commission became due immediately upon execution of the purchase agreement regardless of whether the sale closed.
- The court agreed with the lower court that the contracts were not intended to require the sellers to pay a substantial commission when no sale occurred due to the buyer’s lack of funds.
- The court treated the earnest-money liquidated damages clause and the commission clause as insufficient to shift the risk of the buyer’s financial inability to the sellers in these circumstances.

## Legal Principles

- A real estate broker earns a commission only by producing a purchaser who is ready, able, and willing to buy on terms satisfactory to the seller.
- “Able” includes financial capacity to complete the transaction; a buyer who cannot obtain the necessary funds is not able to perform.
- The mere signing of a purchase agreement does not, by itself, establish the broker’s right to a commission when the buyer cannot consummate the purchase.
- When the seller does not cause the failure of closing, the broker generally cannot collect a commission based on a buyer’s default that results from financial inability.
- Contract language addressing earnest-money liquidated damages and stating a commission figure does not automatically create a commission obligation where the buyer never had the financial ability to complete the sale.

## Conclusion

The Nebraska Supreme Court held that the broker could not recover a commission because the buyer who signed the purchase agreement was not financially able to close, the sale was never consummated, and the sellers did not cause the transaction to fail; under Nebraska law, a broker’s commission requires producing a ready, willing, and financially able purchaser.


Cornett v. Nathan, 242 N.W.2d 855 (1976)