Legitimate Trust and the Powers of the Broker: Critical Lessons for Real Estate Investors

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In real estate transactions, the broker often plays a key role as an intermediary. But what happens when a broker acts outside his authority? A recent case in Bonaire offers real estate investors valuable insights into the importance of clear agreements and legal guidance in real estate transactions.

In this case, a misunderstanding between buyer, seller and broker led to a conflict in which a buyer thought he had bought a house, while the seller had never explicitly agreed. The General Court initially ruled in favor of the buyer, but the Common Court of Justice overturned this judgment on appeal and ruled that no legally valid purchase agreement had been agreed between the parties, leaving the investor empty-handed.

The Case in a Nutshell

A foreign buyer hired a local real estate agent to look for a home on Bonaire. The agent then searched his own client base for a number of potential properties, including the seller's home. The seller's home was partly for personal use and partly for holiday rental via the agent.  

In January 2019, the seller gave the agent permission to quietly and exclusively sell the property to active seekers for USD 2.5 million, excluding USD 50,000 for inventory.

The buyer offered the asking price with conditions, including a technical inspection and an adjustment of the transfer date. The broker communicated to the buyer's request that a purchase agreement had been reached. However, this promise turned out to be premature. The seller, however, remained cautious and emphasized conditions such as clear written sales agreements. Ultimately, the seller decided to withdraw the property from the market. However, the buyer claimed that a purchase agreement had been reached, after which he took legal action.

Relevant legal considerations of the Court

The Joint Court annulled the judgment of the Court of Bonaire. The following legal considerations are relevant in that context.

No binding purchase agreement: There is no purchase agreement because the parties did not agree on all the core terms of the purchase. Specifically, there was no agreement on the settlement of repair costs, the net proceeds for the seller, and other important terms such as the delivery date and resolutive conditions.

No power of attorney or appearance of power of attorney: The reputable real estate agency involved in the sale did not have the seller's authority to make binding statements on his behalf. The Court ruled that the buyer could not therefore justifiably trust that the real estate agent was authorised to conclude a purchase agreement on behalf of the seller.

Written requirement: The communication shows that the seller only wanted to be bound after signing a written purchase agreement. This condition was accepted by the buyer. However, a written agreement was never concluded. In this context, it is also relevant that the written requirement for the purchase agreement of real estate has not yet been included in the BW BES.

Broker actions: The broker acted on his own initiative and wrongly gave the buyer the impression that an agreement had been reached. These statements were not in line with what the seller had intended.

No justified reliance on an agreement: The Court rules that the buyer could trust that a binding agreement had been reached based on the statements and actions of the seller. That trust could at most rest on the broker, but that is not legally relevant.

Important Lessons for Real Estate Investors

The importance of written agreements. Always have a signed written agreement before assuming that a purchase or sale is final. In this case, the Court emphasizes that an oral agreement is not sufficient for a binding purchase agreement, especially if a party has indicated that it will only be bound after signing a written agreement.

Clear agreements with brokers. Set clear boundaries and instructions to brokers, including explicit agreements on their powers. In this case, the broker was accused of acting outside the seller's will and without authority. This caused misunderstandings and a legal battle.

Avoid legal uncertainty. If in doubt, have your contracts and communications legally reviewed before making any major commitments. The seller avoided being bound to the sale of his home by indicating that a written agreement was a requirement for him. This requirement ultimately helped him in his appeal.


This case highlights the importance for real estate investors to be legally prepared and act strategically. Make sure you always make clear agreements. Do you have questions about structuring real estate transactions? Our lawyers will be happy to help you on your way.

About the authors

Didi Wildeman

Lawyer at Wildeman Legal & Mediation |  Read other blogs by this author

Tara Pisapia

Legal Assistant at Wildeman Legal & Mediation |  Read other blogs by this author
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