Held & Hines Quoted, Real Estate Broker Commission Dispute
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Crain’s Business: Marc Held, Partner at Held & Hines, LLP quoted regarding Real Estate Broker Commission Dispute
Broker sues Extell for commissions owed Broker says developer failed to pay commissions totaling $132,900—the remaining 50% of fees he says are owed to him for selling 28 apartments at the Rushmore. By Amanda Fung Published: August 24, 2010
The developers of the Rushmore—Extell Development Corp. and The Carlyle Group—are being sued by a broker for unpaid commissions on sales of 28 apartments at the new Upper West Side development. The suit was filed in the state’s Supreme Court by John Nelsen, who was a referral director at the Corcoran Group. He claims that the developers failed to pay him commissions worth $132,900, which represents the remaining 50% of the commissions he says were owed to him upon closing of the 28 apartments. The plaintiff is seeking the commissions plus interest and legal fees, said Marc Held of the law firm of Lazarowitz & Manganillo, who is representing Mr. Nelsen in the case. Extell and The Carlyle Group have until Sept. 17 to respond to the claims. Both an Extell spokeswoman as well the defendants’ attorney, Thomas Kissane of Schlam Stone & Dolan LLP, said the suit has no merit. Each declined to elaborate on the lawsuit. The Corcoran Group is not involved in the suit. According to the action, Mr. Nelsen sold apartments at a different Extell development on the West Side, the Avery, and was paid in full, but only after some prodding. “My client had to chase Extell for the payments owed to him for the Avery sales,” Mr. Held said. “You want to take care of people who help bring buyers to your building.” At the Rushmore, while the broker was paid the 50% commission when buyers signed a contract for an apartment, the suit says that “the defendants have failed to pay the plaintiff commissions, which represents the remaining 50% balance of the total brokers’ commissions owed to the plaintiff.” The suit follows a crucial court ruling regarding sales at the Rushmore. A few months ago, Extell and Carlyle were ordered by New York state’s attorney general to release 41 buyers from their contracts to buy apartments at the Rushmore because the developers failed to meet the projected closing date in the offering plan. As a result several buyers pulled out of their contracts and their down payments had to be returned. “Brokerage commissions are earned only if a transaction closes,” said Extell in a statement. “We are asking brokers who received payments for units that did not close to return those payments.” Typically, brokers who sell units in new developments receive advances amounting to 50% of their commission at contract signings prior to closing. Unfortunately, if a deal falls through brokers are required to return the money, said industry officials. In Mr. Nelsen’s case, he claims all his deals were successful, and that none of them were affected by the court ruling. Pamela Liebman, chief executive of the Corcoran, was quick to defend the developer. “Extell is diligent in paying brokers,” she said. “They are very honorable and broker-friendly, and we’ve worked with them for many years.”
