Broker Sues Owner For Commission on Babylon Property Sale

Court Decides If Broker Was Procuring Cause of Transaction

Dalbir Singh purchased real property located in Babylon after signing a sales agreement for the property prepared and executed by R. Matthew Shane, a real estate broker employed by All Island Estates Realty Corp., a real estate brokerage firm. The sales agreement provided that the commission due to ERC was $50,000 “from buyer.” After Singh failed to pay the commission, ERC sued Singh. After a nonjury trial,  Supreme Court rendered a verdict in favor of the ERC and a judgment was entered against Singh in the total sum of $50,910.21. Singh appealed.

To prevail on a cause of action to recover a commission, the broker must establish (1) that it is duly licensed, (2) that it had a contract, express or implied, with the party to be charged with paying the commission, and (3) that it was the procuring cause of the sale. Where the broker is not involved in the negotiations leading up to the completion of the deal, the broker must establish that it created an amicable atmosphere in which negotiations proceeded or that it generated a chain of circumstances that proximately led to the sale.

Here, it was undisputed that Shane was a duly licensed real estate broker. Despite Singh’s contentions, the evidence adduced at the trial established that the sales agreement constituted a contract in which Singh promised to pay Shane a commission of $50,000 for the  sale. Despite Singh’s assertions to the contrary, the sales agreement was enforceable because, insofar as relevant to the case, essential terms of a contract for the sale of real property included the price and terms of payment, as well as the description of the property to be sold. And Singh’s claim that the parties’ anticipated executing a more formal contract did not impair the effectiveness of the agreement, as the agreement embodied all of the essential terms.

To establish that a broker was the procuring cause of a transaction, the broker must establish that there was a direct and proximate link, as distinguished from one that is indirect and remote, between the bare introduction of the parties to the transaction and the consummation of the sale. In order to qualify for a commission, a broker need not have been involved in the ensuing negotiations or in the completion of the sale, if such a direct and proximate causal link exists. Here, Shane’s testimony established that he negotiated the sale price for the property on behalf of Singh and set in motion the chain of circumstances that resulted in the sale, even though he did not participate in negotiations regarding obtaining a new lease from the tenant of the property, which was a condition of the transaction.

The judgment in favor of ERC and against Singh was affirmed.

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