Real Estate Agent's Entitlement to Commission
Question:I would appreciate if anyone can shed some light on this scenario:
A real estate broker, with whom the seller of commercial real estate has no agreement, introduces a purchaser to the seller and is demanding commission if the sale materializes. Is there some industry practice or legal basis that supports the broker's claim to commission. Am I missing something here?
Response by Global Lawyer:
Unless there is an agreement in advance with the broker, I don't see any entitlement to the commission. Typically, a broker who has an interested buyer will contact the seller, inform him that he has a potential buyer and ask the seller if he will pay a commission (and at what rate or in what amount) if the sale is consummated with that buyer. This is fairly common in "fsbo" home sales. As I assume you know, the broker's entitlement to a commission is based upon the broker being the "procuring cause" of the sale. If the broker does more than just introduce the parties--e.g., if the broker becomes actively involved in negotiations or drafting documents, there may be an equitable argument for a commission, or in this situation, the broker might argue that there was an implied understanding that he would be entitled to a commission. But any broker who doesn't resolve this up front with the seller is, in my opinion, not very professional. Bob Sher.
