WHEN “EXCLUSIVE” MEANS "NOTHING EXTRA"

A dispute between A* Real Estate and A* Properties revolved around the interpretation of a broker agreement tied to a multimillion-dollar financing deal. At its heart lies the question of whether A* Real Estate was entitled to a commission despite not directly securing the loan. The agreement between the parties was labeled "exclusive" and provided that A* Real Estate would help A* Properties obtain debt financing for commercial properties. Crucially, it also included an “Exclusion” clause, shielding A* Properties from paying a commission if they finalized a deal with certain named lenders—so long as a term sheet was signed by a specific date.

A* Properties ultimately secured financing from one of those lenders—M* Bank—but did so after the exclusion deadline passed. A* Real Estate, believing the timing restored its right to a commission, sued for payment. However, the court was unmoved.

In its ruling, the Appellate Division made a critical distinction between an exclusive agency and an exclusive right to sell. Under the former, the broker only earns a commission if it is the procuring cause of the deal. Under the latter, the broker is entitled to a fee regardless of its involvement. The agreement, the court found, fell short of conferring this broader, automatic entitlement. It lacked the clarity and express terms necessary to convert it into an exclusive right to sell arrangement.

Moreover, the court reiterated that brokers bear the burden of proving they were the procuring cause of a transaction unless the contract unambiguously says otherwise. Since A* Real Estate did not procure the loan and the agreement did not guarantee a commission in all cases, the court affirmed the dismissal of the claim.

Ultimately, this decision reinforces the importance of precision in contract drafting—particularly where commission structures hinge on timing and exclusivity. For brokers, the takeaway is clear: contractual language must leave no room for ambiguity if they wish to secure their fees without being the direct cause of a financing deal.

Looks like they were exclusively excluded from a payday ....

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DECISION