Broker Not Entitled to Commission for Transaction That Did Not Close

On November 29, 2016, Justice Singh of the New York County Commercial Division issued a decision in Kassin Sabbagh Realty LLC v. Beekman Tower Assoc. LLC, 2016 NY Slip Op. 32371(U), holding that a broker was not entitled to a commission for a transaction that did not close, explaining:

The common law rule in New York is that a real estate broker earns a commission if he or she produces a person ready and willing to enter into a contract upon the seller's terms. However, parties to a brokerage agreement are free to add whatever conditions they may wish to their agreement.

New York courts have refused to allow a broker to collect a commission where the closing failed and the commission agreement specified that a commission is due at closing. . . .

Here, the commission agreement states unambiguously that at closing, broker shall be paid a commission equal to one-half percent (0.5%) of the purchase price. Similar to Mizrahi, a condition precedent for the payment of the commission was the closing. A closing occurs where a seller transfers title to a buyer, and the buyer transfers consideration to the seller. Here, no deal was consummated as the documentary evidence established irrefutably that a condition precedent to plaintiff earning the commission that a closing take place, did not occur. Therefore, plaintiff
is not entitled to the brokerage commission.

(Internal quotations or citations omitted).