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Hamptons.com
September 29, 2016

Can A Real Estate Broker Be Entitled To A Commission If The Client Buys A Different Property From The One He Shows The Buyer?

John A. Viterittiby John A. Viteritti
in Real Estate
Home Real Estate

In our last article, we drew on a court ruling that demonstrated how a seller/client may be obligated to pay a broker’s commission absent a written listing agreement, (employment contract), with the seller. In this article, we examine whether a broker who represents a buyer may be entitled to a commission even if the buyer buys a different property than the one shown to them by the broker, again, absent a written employment contract between the broker and buyer. For the answer, we look to the Manhattan case, SPRE Realty, Ltd. V. Dienst, May 20, 2014, Appellate Division, Supreme Court. The lower court ruling in favor of the broker took place on October 1, 2013.

The Appeals Court stated the following: “In this appeal, we must determine whether the plaintiff broker has alleged facts sufficient to establish its entitlement to a commission on the sale of real estate, where it expended significant effort locating an apartment for buyers who abandoned the transaction and purchased another apartment in the same building 18 months later.” It further stated: “In addition, we take this opportunity to clarify the standard by which a broker may be found to have been the ‘procuring cause’ of a real estate transaction.”

The court determined that the buyers retained the broker to help them purchase a luxury residence in Manhattan. It further determined that even though the parties did not have a written agreement, they did have an understanding that the broker would receive a commission after finding them a residence that met their expectations. The broker showed the buyers several residences in Manhattan over the next 18 months, and around October 2007, showed them a condominium unit under construction. After the buyers expressed an interest in the unit, the broker brought them to meet with the developer, and the broker negotiated terms of the purchase on the buyer’s behalf. The agreement was for two units for $11.5 million. A contract exchanged between the two attorneys representing the seller and buyer contained the same terms as negotiated by the broker. The broker searched for architects who could meet the buyers’ design requirements and subsequently arranged a meeting with an architect and the developer at the buyers’ summer home in Sag Harbor. In late August 2008, the buyers changed their minds and said they were no longer in the market for a new home. A few months later, according to the court, the broker contacted the buyers to inquire if they had any renewed interest in purchasing a home but did not receive a response. The court further stated that the broker continued “in good faith” to assist the buyers in their search for a commercial property to be used as an antique store. They repeatedly confirmed they were no longer seeking to purchase a residence and had no interest in the building where the unit they originally agreed to purchase was located. Despite these assurances, in February 2010, they purchased a different pair of units in the same building. The broker filed a lawsuit for a commission in May 2013 for breach of an implied contract and unjust enrichment on the part of the buyers. The buyers countered that they never signed a contract of sale for the first units, and the broker was not involved in the purchase of the units they did buy.

The court disagreed. It stated, in part: “A broker may be entitled to a commission where the buyer authorizes the broker to submit an offer to the seller but subsequently fails to execute or arbitrarily refuses to enter into a contract of sale.” The court also said: “Even if SPRE [the broker] is unable to prove that it was the procuring cause, it may be able to prove that the defendants [buyers] terminated its activities in bad faith and as a mere device to escape the payment of the commission.” The court also gave credit to the broker’s contention that the units the buyers ultimately purchased were “substantially identical” to the units that the broker had procured for them.

On May 20, 2014, the Appellate Court unanimously upheld the lower court’s decision of the October 1, 2013 ruling in favor of the broker with costs.

While in the past, it has been most common for real estate brokers to represent sellers, this is changing. It has now become, even in the Hamptons real estate market, more common for brokers to represent buyers.

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This Topic Has Legs And Knows How To Use Them

This Topic Has Legs And Knows How To Use Them

  • 167 Dune Road, Bridgehampton, NY 11932⁠
Saunders Exclusive: $42,500,000⁠
@jenniferwilsonhamptons 
@edbruehl @leemohlerehamptons 
@hamptonsrealestate 
⁠
Experience extraordinary coastal living with this exquisite oceanfront estate on Dune Road in Bridgehampton. ⁠
⁠
Designed by the renowned architect Francis Fleetwood, this remarkable property boasts 300 feet of private ocean frontage, complete with its own private boardwalk leading directly to the beach, all set on over 3 acres of prime land.⁠
⁠
The charming shingle-style residence encompasses 4,200 +/- sq. ft. of luxurious living space, featuring 5 bedrooms and 5 full bathrooms, plus an additional half bath.⁠
⁠
Read the full article at Hamptons.com (Link in Bio)⁠
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#duneroad #oceanfront #bridgehampton #realestate #hamptons #francisfleetwood ⁠
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  • The Hamptons have seen their fair share of collaborations and takeovers this summer. Still, nothing compares to The h.wood Group and Chase Sapphire Reserve’s transformation of Montauk hotspot Mary Lou’s into Delilah Montauk.⁠
⁠
The four-day takeover combined unforgettable dining experiences with show-stopping live entertainment featuring performances by Zack Bia, Alesso, Gwen Stefani, and DJ Pee.Wee (Anderson Paak). ⁠
⁠
Exclusively for Chase Sapphire Reserve cardholders, diners were treated to white glove hospitality and Delilah’s staples, including the famous chicken tenders and tuna tartare, and bold twists on Hamptons classics like lobster rolls, striped bass crudo, and crab and avocado toast. 

Check out more at Hamptons.com (Link in Bio)

#gwenstefani #alesso #djpeewee #chasesapphirereserve #delilahmontauk #montauk #hamptons
  • LVIS thrift shops are open Tuesdays through Saturdays 10 AM through 5 PM

donations are accepted Wednesday through Saturday 10 AM through 1 PM by appointment 

located at 95 Main St East Hampton
  • Check out the Top Hamptons Events This Weekend!⁠
⁠
🚗 The Bridge IX⁠
📅 Sat, Sept 13 | 2–7PM⁠
📍 The Bridge, Bridgehampton⁠
Over 300 rare automobiles showcased across stunning landscapes.⁠
⁠
🎬 23rd Annual Surf Movie Night⁠
📅 Fri, Sept 12 | 5:30–9PM⁠
📍 Southampton Arts Center⁠
Surfboard swap, live music & outdoor film screening. 🌊⁠
⁠
🍝 San Gennaro Feast of the Hamptons⁠
📅 Sat, Sept 13 – Sun, Sept 14 | 10AM⁠
📍 Hampton Bays⁠
Italian pastries, live entertainment & fireworks Sat @ 8:15PM 🎆⁠
⁠
🎭 In Process: Roderick George⁠
📅 Sat, Sept 13 | 7PM⁠
📍 Guild Hall, East Hampton⁠
A special in-process presentation of The Missing Fruit (Part I).⁠
⁠
🎤 Sheena Easton at WHBPAC⁠
📅 Sat, Sept 13 | 8PM⁠
📍 Westhampton Beach PAC⁠
Grammy-winning artist live on stage!⁠
⁠
☕ Cars & Coffee⁠
📅 Sun, Sept 14 | 9–11AM⁠
📍 Bridgehampton Museum⁠
Classic & exotic cars, food, drinks & live music.⁠
⁠
🛍 Hampton Vintage⁠
📅 Sun, Sept 14 | 10AM–5PM⁠
📍 Westhampton Beach Village Green⁠
Shop unique vintage finds!⁠
⁠
🎶 Hamptons Festival of Music Finale⁠
📅 Sun, Sept 14 | 4PM⁠
📍 St. Luke’s Church, East Hampton⁠
Featuring Cimarosa, Berlioz & Beethoven.⁠
⁠
🍷 Wine Dinner with Pradorey at R.AIRE⁠
📅 Tues, Sept 16 | 6:30PM⁠
📍 Hampton Bays⁠
Five-course tasting menu with exquisite wine pairings.⁠
⁠
🎥 Toy Story 30th Anniversary Screening⁠
📅 Sept 12–15 | Various Times⁠
📍 Southampton Playhouse⁠
Celebrate Woody & Buzz’s timeless adventure!⁠
⁠
Check out more events at Hamptons.com (Link in Bio)⁠
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#carshow #hamptons #sangennaro #sangennarofeast #winedinner #bridgeIX
  • The Animal Rescue Fund of the Hamptons (ARF Hamptons) hosted the Bow Wow Meow Ball in East Hampton. The evening’s honorees, Ellen and Chuck Scarborough, were presented with the Champion of Animals Award, recognizing their more than twenty-five years of support to ARF. ⁠
⁠
Over 400 guests celebrated ARF’s remarkable work with cocktails, followed by dinner catered by Olivier Cheng. Peter Marino, accompanied by his daughter and ARF Board Member Isabelle Trapnell Marino, presented the Scarboroughs with their award. ⁠
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📸: Patrick McMullan/PMC⁠
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Check out the full gallery at Hamptons.com (Link in Bio)⁠
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#arf #bowwowmeowball #hamptons #animalrescuefund #animalrescue
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