Often, we come across a court decision based on a narrow set of facts and, thus, limited in its effect. The court’s analysis and the case’s result is primarily of interest to the involved parties and a handful of others who might find themselves in the same situation. Sometimes, however, there is a larger lesson to be gleaned, one not even about the narrow subject matter discussed by the court. As we see it, at the very end of January, a Florida District Court of Appeal Court delivered such a decision.
The subject matter before the court was a dispute over the obligation to pay a brokerage commission. Florida law provides that “[i]n the absence of a special contract, a broker is entitled to a commission when that person is the procuring cause of a sale.” We don’t know how many states have a similar law. Our experience is with those whose law requires a written agreement or a specific written substitute for such an agreement. For example, here is the relevant part of New Jersey’s statute [N.J.S.A. 25:1-16]: [Read more…]
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We’ve always been a little murky as to whether a successor landlord always becomes obligated to pay renewal commissions to the original broker responsible for the presence of an existing tenant. After all, there is no actual agreement between that later landlord and the broker whose original commission agreement calls for the payment of a renewal commission. The broker can’t point to where it and the successor landlord “shook hands.”
How long should it take to prepare the first draft of a lease that needs to include several (or more) “custom” business terms? We’re asking about those leases that need some thought, not the kind that can be prepared using a document assembly program. And, certainly not the kind that, in the future, will be “written” through the use of artificial intelligence (AI). [Yes, we are firmly in the school of belief holding that, not very long from now, machines will be preparing most first drafts, many subsequent drafts, and to many who depend on lease drafting to pay their bills, more final leases than you can now imagine. We even think that dueling AI systems will be writing a lot of leases and other agreements, unaided by humans, within as soon as five years.]
Last week, we set the background for understanding what it means for a broker to be the “efficient producing cause” behind a lease or sale. The background was in the form of a story from a 2012 unpublished New Jersey court decision. The long version can be seen by clicking: 
It is very common, and Ruminations believes appropriate, for a real estate broker to bargain for a commission to be paid if a property is sold or leased even after its brokerage agreement expires. Basically, most brokerage agreements have some language providing for such payment if the broker had something to do with bringing forth the buyer or tenant. Those provisions have to deal with three major principles
For some reason, it seems that the business of real estate brokerage is subject to a little more scrutiny than experienced by other businesses. For example, there is a common law principle known as the Statute of Frauds. A book could be written about this aspect of the common law and its subsequent incorporation in most state statutes (written law). We won’t write one today.
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