Protecting & Securing Real
Estate Brokerage Commissions An issue that we are frequently
called on to litigate is whether a real estate broker is entitled to a
brokerage commission. The real estate broker must be licensed in the State of
New York. Also, a real estate agent or salesperson has no independent right to
sue for a real estate commission unless the real estate broker assigns the
right to the commission to the real estate agent or salesperson.
Our office frequently utilizes
making a motion for summary judgment in order to avoid needless litigation cost
and delay. Summary judgment is an appropriate remedy to be utilized in actions
for real estate brokerage commissions. The standard requires that the proponent
of a motion for summary judgment make a prima facie showing of entitlement to
judgment as a matter of law, by advancing sufficient "evidentiary proof in
admissible form" to demonstrate the absence of any material issues of
Real Estate Broker Employment
Contract Agreement An employment contract is expressly established when an owner of property lists
it with a broker and the latter acts to procure a buyer or tenant on the
owner's terms. It is well settled under New York Law that where the services of
a real estate broker are engaged, in the absence of an agreement to the
contrary, the broker earns his commission when he produces a lessee who is
ready, willing and able to enter into a lease on terms acceptable to the
lessor. This applies to sales and lease transactions. To earn a commission, a
broker must be the procuring cause of the deal. Mere introduction and showing
of the property has been held to be insufficient.
Is A Written Commission Agreement
Required? A written commission agreement although preferable is not required. In this
regard it is noted that General Obligations Law section 5-701 (10) specifically
exempts licensed real estate brokers and salespersons from the requirements
that such agreement be in writing.
The contract of employment may be
established by facts showing, in the absence of an express agreement, a
conscious appropriation of the labors of the broker, and in some cases by the
mere acceptance of the labors of the broker. Even if there is no agreement,
express or implied, between the principal and broker, if the principal receives
a benefit from the real estate broker's services under circumstances which, in
justice, preclude him from denying an obligation to pay them, the broker is
entitled to some relief.
t cannot be assumed that a broker
works gratuitously, and the lessor and lessee are held to such knowledge when
they accept the result of the broker's services. When the lessor has accepted
the lessee brought to him by a broker, and when the lessor and lessee have
agreed upon terms and execute a lease agreement, the broker's work is done and
he has earned a commission.
Further, where a contract of sale or
lease agreement admits the broker's performance of services and includes an
express promise by the seller to pay the broker's commission, the broker is
entitled to summary judgment on its claim for a commission as a third-party
beneficiary of the contract or lease.
Real Estate Broker Commission
Whether a contract will be implied from the conduct of the parties depends upon
the circumstances involved. A contract cannot be implied in fact where there is
an express contract covering the subject matter involved.
A broker is not entitled to
compensation on the principle of ratification merely because a person accepts
the result of unsolicited service. In order to create an implied contract
entitling a broker to a commission, the broker's services must have been
performed under such circumstances as to notify the recipient that the services
were being performed for him and not for another person.
Further, the recipient must have
reason to understand that the services were rendered in expectation of payment
of a commission by the recipient. The recipient must have acted in some manner
to indicate acceptance of the services. Merely selling or leasing a property to
a party voluntarily brought forward by a real estate broker will not render the
seller liable to the broker for a commission. Consent to a real estate broker's
rendition of unsolicited services will not entitle the broker to a commission
without further indications that the recipient intended to enter into a
contract for the broker's services.
Are You Entitled to a Reasonable
Commission? Where the parties’ agreement is
silent as to the specific amount of the commission the broker is entitled to a
commission that is fair and reasonable. In the absence of a contract expressed
or implied, a broker is entitled to receive a commission in a reasonable amount
for bringing together the parties transaction.
Any information you may have obtained from this site is not, nor is it intended to be, legal advice.