Legal Updates

Absent a written agreement a real estate agent is not entitled to a brokerage fee even if was the efficient promoter of the transaction

August 13, 2020

A middleman who assisted to promote a real estate transaction but neglected to first enter an agreement with the seller, demanded the seller to pay him a brokerage fee.
The Court held that no brokerage agreement was entered into between the seller and the middleman, and therefore the middleman is not entitled to a brokerage fee even if he was the effective factor in promoting the transaction. Generally, when one was the effective factor in the promotion of a transaction, consideration may be claimed even in the absence of a clear and detailed agreement. The Israeli Real Estate Agent Law, however, contains a statute of frauds clause, which requires a series of details to be defined and determined in an ex-ante writing, as a prerequisite for any entitlement to brokerage fee. Although it may sometimes be possible to complete details post-ante, the consumer-right approach of the law allows for completion of details only in situations where the missing details are not controversial. This approach gains even higher justification when parties to a transaction are sophisticated and experienced parties, as in this case. Here, the middleman received payment from the purchaser and demanded payment also from the seller, who did not react. No agreement was reached between, nor have prior details been arranged based on which later completion could be made. Thus, the middleman is not entitled to brokerage fees from the seller.