Legal Updates

A realtor is not entitled to fees from a person who joined a purchase transaction and did not sign a fee agreement

July 5, 2018

A real estate brokerage agreement was executed between a realtor and purchaser for the purchase of part of a land, but did not include the addresses of the parties and their identity numbers, and in the end the purchaser purchased another part of that land. Another company joined the purchaser at the time of purchase, and the realtor demanded fees from it too.

The Court held that a realtor is entitled to fees only if holds a brokerage license, executed a fees agreement and was the "efficient party" that led to the conclusion of a real estate transaction. The fees agreement must include the details of the parties, the type of transaction, the description of the asset, the planned transaction price and the amount of fees. There will be no entitlement to fees when there is no written agreement, but the Court may enable, especially when dealing with a sophisticated commercial purchaser, completion of missing details in a written agreement, insofar as the realtor can show that such details were not lacking due to uncertainty that existed at the time of executing the agreement. Here it is a fees agreement between commercial parties with experience and expertise, and not between a realtor and a "one-time" consumer, the missing details may be completed and the land acquired changed as part of the negotiations. Therefore, the realtor is entitled to fees from the original purchaser. However, the realtor is not entitled to fees from the second purchaser who purchased the property jointly, as he did not sign a fees agreement. The Honorable Justice Meltzer noted that the realtor also acted in bad faith and with a personal interest in the transaction because he signed a fees agreement with the seller as well, and did not disclose this to the purchaser.