Legal Updates

A realtor who does not act skillfully to obtain material information about the property may lose his entitlement to brokerage fees

March 31, 2021

A week before the planned entry into a leased apartment, it was suddenly discovered that a massive renovation of the building is expected to begin, requiring the installation of scaffolding in the area of the leased apartment for a period of approximately a month and a half. The lessees withdrew from the lease transaction and demanded that the realtor repay the commission paid.

The Court accepted the claim and ordered the relator to repay the brokerage fees to the clients. Once a real estate lease or sale, in which a realtor was the efficient cause thereto, the realtor is entitled to the full fees even if the real estate agreement is later cancelled. However, a realtor must act skillfully and reasonably and take appropriate measures under the circumstances to obtain material information concerning the property that is the subject of the brokerage transaction. Here, the realtor did not bother to make inquiries with the property owner and failed to ask whether there was material information related to the apartment and the building. Had the realtor made the relevant inquiries, the property owner, who knew about the expected renovation, could have disclosed the proper information and the lessees would have found out and would not have entered into the lease transaction in the first place. Therefore, the realtor is not entitled to brokerage fee.