A Real Estate Broker is Screwed When She Fails to Get a Signed Listing Agreement

HNWBusiness and Corporate Legal Services, Business Litigation

  • unhappy real estate agentHere’s a recent case that seems unfair to a real estate broker who failed to get a signed commission agreement before introducing a buyer to a seller of an apartment complex.
  • The trial judge denied plaintiffs the right to a real estate broker’s commission because plaintiffs failed to comply with the strict requirements of the Statute of Frauds, N.J.S.A. 25:15-16.
  • Additionally, the judge determined that plaintiffs’ failure to comply with the statute of frauds prevented recovery on breach of contract, quantum meruit, and tortious interference with contractual relations.

Facts of the Case

In April of 2018, a licensed New Jersey real estate broker contacted a buyer to inquire whether his company was interested in purchasing a residential apartment complex.  The property “was not listed [for sale] . . . on the Multiple Listing Service . . . nor with any other real estate broker.”  Defendants thereafter submitted a written offer to the broker to purchase the property and in a text message stated, “and if I can make it work, I will pay you [a] fee directly?”

The broker then sent a proposed broker commission agreement setting forth a proposed commission of two percent of the purchase price.  Defendants never signed the agreement.

Thereafter, defendants’ attorney sent a letter to plaintiffs’ attorney stating that no commission agreement existed between the parties that would warrant a commission payment.

Plaintiffs filed a complaint alleging breach of contract, quantum meruit, and tortious interference with prospective economic advantage.

Following oral argument, the trial judge concluded there was no signed commission agreement because no agreement was reached on all material terms, and the requirements of N.J.S.A. 25:1-16(d) were not satisfied, therefore plaintiffs were not entitled to a real estate commission from defendants on breach of contract grounds.  The judge further determined that failure to comply with the statute of frauds precluded a quantum meruit claim and a tortious interference with contract claim.  The judge highlighted, “[t]here were ample opportunities in the communications between the parties in this case for . . . plaintiff to comply with the statute [ ] at a very minimum to send a confirming letter . . . .”

The judge concluded the emails between the parties violated the statute of frauds as “there was no meeting of the minds” and strict compliance with the statute of frauds is essential for a broker to recover a commission for the sale of real estate.  The judge granted defendants’ motion to dismiss the case with prejudice.

In addressing plaintiffs’ quantum meruit and tortious interference with contract claims, the judge found that a broker who fails to comply with the statute of frauds cannot obtain relief under these causes of action.

To discuss your NJ breach of contract or business dispute matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Contract Law Attorney

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