In F. Richard Wolff & Son, Inc. v. Tutora, F. Richard Wolff & Son (Wolff) sued Anthony Tutora for a commission Tutora allegedly owed to the company.

Tutora hired Wolff as a real-estate broker to sell Tutora's "adult care resident facility" business and accompanying real estate, "as a package." The terms of their contract provided that Wolff's commission would be 6.5% of the selling price.

After Wolff found a prospective buyer, Tutora agreed to a $1.3 million deal, but the sale was subject to the purchaser getting a substantial bank loan. When that fell through, the parties continued their negotiations and the purchaser bought the business and leased the real property from Tutora, months after the brokerage agreement expired.

Wolff felt that it was still owed a commission based on the $1.3 million price because the company had procured a "ready and willing" buyer. The Westchester County Supreme Court felt otherwise and dismissed the case.

On appeal, the Appellate Division, Second Department, reiterated the established rule that "a real estate broker will be deemed to have earned his or her commission when he or she produces a purchaser who is not only ready and willing to purchase ... but able to do so as well." As the sale of the business and real estate was contingent upon bank financing, and the purchaser was unable to close the deal originally contemplated without those proceeds, Wolff wasn't entitled to a commission.

The AD2 wasn't afraid of no Wolff.

For a copy of the Appellate Division's decision, please use this link: F. Richard Wolff & Son, Inc. v. Tutora  

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

In Gaisi v. Gaisi, Mark Hus wanted legal fees for securing his client a brokerage commission

Before the Gaisis filed for divorce, Mr. Gaisi entered into a brokerage agreement with Kirk Properties to sell certain property. After an initial deal didn't materialize, a Referee was appointed and a sale to the original purchaser resulted in “sizable proceeds” for Mr. Gaisi.

Elizabeth Kirk-Blitzer, the president of Kirk Properties, sought the Referee to pay her a broker’s commission from those proceeds and eventually entered into a “Stipulation Releasing Brokerage Agreement,” which provided Kirk-Blitzer with $35,000 in satisfaction of all claims between Kirk-Blitzer and the Gaisis. 

The Westchester County Supreme Court then granted a request made by Mark Hus, Kirk-Blitzer’s attorney, that Gaisi pay $9,420 for Hus’s work to obtain the broker’s fee.

Since the settlement did not provide for fees, Gaisi appealed to the Appellate Division, Second Department, which agreed that such sums may only be awarded when "authorized by agreement between the parties.” When a settlement fails to reserve such rights, any fee entitlement is deemed to have been waived.

Hus must have been in a huff over that.

To download a copy of the Appellate Division’s decision, please use this link: Gaisi v. Gaisi

Continue reading "ATTORNEY DENIED FEES" »

Posted by Lucas A. Ferrara, Esq. at 12:00 PM | Permalink | TrackBacks (0) | Comments (0)

In A-1 Realty Network of Homes, Inc. v. Kwang Ho Kim, A-1 negotiated an agreement on behalf of Mr. Kim (and others) where, for the sum of $1.1 million, two purchasers would buy the property in question, and A-1 would receive a brokerage commission in the amount of $50,000.

Although the deal closed, the commission was not paid. After litigation was started in the Suffolk County Supreme Court, that court was of the opinion that A-1 was entitled to its commission and awarded the broker a money judgment as against Ho Kim (and the other defendants) in the sum of $50,000.

On appeal, the Appellate Division, Second Department, reversed finding that A-1 had failed to demonstrate an  entitlement to relief. As the court observed:

"To recover a commission, a broker must establish that he or she is duly licensed, that he or she has a contract, express or implied, with the party charged with paying the commission, and that he or she was the procuring cause of the sale or lease" .... A triable issue of fact exists as to whether the plaintiff was the procuring cause of the sale. The Supreme Court therefore erred in awarding the plaintiff summary judgment on its first cause of action against the appellants.

What is procuring cause?

The answer to that question will vary, because a number of factors can influence the response.* But, typically, if the transaction wouldn't have consummated without the broker's efforts, then that individual will be viewed as the "procuring cause." 

And that’s no hokim!

For a copy of the Appellate Division’s decision, please use this link: A-1 Realty Network of Homes, Inc. v. Kwang Ho Kim  

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*For a 17-page analysis distributed by the National Association of Realtors, please use the following link: Procuring Cause

Posted by Jonathan H. Newman, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (0)

Typically, a broker's commission is earned when the broker produces a buyer "ready, willing and able" to purchase the property on terms acceptable to the seller. That arrangement may be modified by a writing which provides to the contrary. And, absent any irregularities in interpretation, the terms of that agreement will be enforced by the courts.

By way of example, in Norma Reynolds Realty, Inc. v. Edelman, a real-estate broker sued a seller seeking to recover $275,000 in commissions which the broker believed were due and payable even though the transaction was never consummated. An analysis of the underlying terms of the parties' contract reveals that the broker lacked a legitmate claim.

The governing language provided that the "commission to be paid...shall only be due and paid, as, if and when title closes." The agreement further provided that "in the event that title fails to close for any reason whatsoever and the seller retains the down payment as liquidated damages, the broker shall not be entitled to any compensation in connection with the down payment."

Finding the deal did not close, the Suffolk County Supreme Court rejected the broker's compensation claim and dismissed the case. Since the parties' agreement was clear and "unambiguous," and there was "'no reasonable basis for a difference of opinion,'" the dismissal was affirmed on appeal to the Appellate Division, Second Department.

For a copy of the Appellate Division's decision in Norma Reynolds Realty, Inc. v. Edelman, please click on the following link:
http://www.nycourts.gov/reporter/3dseries/2006/2006_04261.htm

For a copy of a New York State Department of State's legal memorandum on the topic, "DEFINING WHEN A REAL ESTATE BROKER'S COMMISSION IS DUE," please click on the following link:
Legal Memorandum LI10

Posted by Lucas A. Ferrara, Esq. at 8:25 AM | Permalink | TrackBacks (0) | Comments (2)