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 fact.
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.
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.
It 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.
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.
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.