Realtors sought a commission of approximately ILS 9 million for a transaction for the sale of a plot in Tel Aviv with an area of approximately 45 dunams, even though the transaction was concluded and executed two years after the negotiations between the sellers and the buyers were terminated.
The Court rejected the claim of the realtors and held that they were not the effective factor transaction. A key condition for determining a realtor’s right to receive brokerage fees from a client is that the realtor was "the effective factor that resulted in the parties entering into a binding agreement". However, actions of a client intended to prevent the realtor from receiving its fees are not compatible with the principle of good faith. Here, the realtors did initially connect the buyers and the lot owners, but the negotiations were short and did not produce any results. The negotiations were stopped at the initial stage at the initiative of the landowners without being renewed by the realtors. The new transaction was made without any involvement of the realtors, therefore the realtors cannot be seen as an "effective factor". In addition, because the termination of the negotiations was done at the owner's initiative without the realtors bothering to renew it, the buyers did not act in bad faith to avoid paying the realtors fees and did not have to inform the brokers regarding the renewal of negotiations towards a new transaction. In light of this, the realtors are not entitled to a fee.