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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:
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