A realtor demanded brokerage fees from a client who was referred by him to purchase an apartment as part of a receivership proceeding that included a bidding process. The client refused to pay a brokerage fee, as the process of purchasing the apartment was not carried out with the involvement of the realtor.
The Court rejected the claim and held that the realtor was not entitled to brokerage fees because he was not the effective factor in the transaction. One of the conditions for eligibility for brokerage fees under Israeli law is that the broker was the effective factor that led to the parties entering into a binding agreement. In order to decide the identity of the effective party in the transaction, one may consider, inter alia, the degree of intensity of the realtor’s actions, the scope of the interaction with the parties, the number of meetings and the involvement of the realtor in the negotiations and formulation of the terms of the transaction. Here, the realtor posted on Facebook information referring to a receivership process in which an apartment is offered for sale. The realtor did not visit the apartment with the client, did not talk to the receiver about the transaction, was not involved in the process of submitting the bid, setting the price nor signing the agreement. In addition, the receivership proceeding is a proceeding that is not under the control of the realtor but rather under the control of the receiver and therefore the very bidding process in receivership prevents the realtor from being the "effective party" in the agreement between the buyer and the seller. In light of this, the realtor is not entitled to the brokerage fees.