Dealer Denied Fee for Lack of Written Settlement

Broker Denied Commission for Lack of Written Agreement

A New York federal district court gave a summary judgment in favor of a seller, ruling against a broker's breach of contract and commission claim because New Jersey law requires brokers to abide by the fraud statute and specifically state whether a broker should receive money for commissions a sale he didn't cause.

A New York real estate and business agent Tayyib Bosque, Corp. (“Bosque”) agreed to assist a property owner (“Seller”) in selling three New Jersey businesses for a commission. Bosque did not have a real estate license in New Jersey in New Jersey and therefore offered services as a broker and finder. He traveled to New Jersey to inspect the properties, conduct market research on similar companies, and took at least three investors to tour the properties. After Bosque found a buyer for the property, he assisted in negotiating the terms of the contract and managing the logistics of when the down payment and the contract are carried out. The seller contradicted some of the buyer's terms and conditions and eventually sold to another buyer. Nonetheless, Bosque claimed that the deal did not oblige him to initiate the sale in order to earn the commission. He claimed that the only conditions were to pay a down payment and a signed contract from a buyer, which he fulfilled. The seller disagreed and refused to pay the commission. Bosque sued, among other things, for breach of contract.

In applying New Jersey law, the court found important differences between a real estate agent, a business agent, and a finder. A New Jersey real estate agent must have a New Jersey real estate license while a business agent does not need to be licensed. In addition, unlike business brokers, finders receive a commission when they find a buyer, regardless of whether the sale is completed with that buyer. Although Bosque argued that he was a finder, the court ruled that Bosque was acting as a business broker, going beyond a finder's duties of locating and bringing in parties, analyzing the market, and negotiating the terms and price .

As a broker, Bosque's business was governed by the New Jersey Statute of Frauds. The law states that New Jersey business brokers are eligible for commission only if the amount or commission rate is signed in writing and (physically or electronically) by the seller, buyer, or agent. Although Bosque submitted a number of text messages about the amount of Bosque's commission, the court found that the texts did not constitute a written, binding contract, as there was no electronic or other signature. If a broker is entitled to commission under New Jersey law for a transaction that he or she did not cause, it must be expressly stated in the agreement. Although Bosque found a buyer for the property, the buyer and seller never entered into a binding contract, and Bosque knew that the seller was working with another broker to find a buyer. However, none of the writings Bosque relied on indicated that he was entitled to any commission on sales he did not cause. Finally, since Bosque could not prove the existence of a contract under the Fraud Statute, his common law claims to unjust enrichment and quantum meruit were also excluded.

On appeal, the Second Circuit upheld the district court's decision and determined that New Jersey was the correct choice of law. The court then reiterated that in New Jersey, if a broker is not the cause of the transaction, the broker can only earn a commission if the agreement specifically provides for it and Bosque's textual conversations with the seller were insufficient to accomplish it Default.

Tayyib Bosque, Corp. v Emily Realty, LLC, No. 17 CIV. 512 (ER), 2019 WL 2502494 (S.D.N.Y. June 17, 2019), aff & # 39; d sub nom. Tayyib Bosque, Corp v Emily Realty, LLC, 813 F. App & # 39; x 628 (2nd Cir. 2020)


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