A New York State appeals court has issued a groundbreaking decision that lawyers said will protect buyers’ brokers when they are bypassed on commissions, following a decade-long lawsuit over the sale of a Brooklyn home.
A New York State Appellate Division panel ruled last week that Brooklyn-based Talk of the Town Realty was entitled to a commission for procuring the buyers of a Sheepshead Bay house, even though the buyers worked directly with the listing broker to close the sale. The 4-1 ruling overturned a 2011 decision in a state trial court.
“This decision is a game changer for brokers trying to collect commissions when they have been blocked out of the final negotiations of a real estate deal and are not paid a commission,” attorney Mark Held, a partner in Manhattan-based Held and Hines, who represented Talk of the Town, said in a statement. “For decades it was understood that the last broker standing was considered the procuring cause of a transaction.”
The dispute dates back to 2001, when prospective buyers Mark Kotliar and Anna Schiglik hired Simon Yermash, a friend and broker at Talk of the Town, to find them a home. Yermash led them to 1880 East 22nd Street, which had been listed that April with Mary Nuccio Realty for $799,000.
Yermash showed them the property, and Kotliar and Schiglik submitted an offer of $699,000. But after Yermash informed them that the offer was too low, they allegedly stopped taking his calls. A month later, they negotiated a deal to buy the property directly with Brooklyn-based Fillmore Real Estate, which the sellers had hired to replace Mary Nuccio.
The couple agreed to pay $730,000, and they closed on the sale later that year.
However, Talk of the Town was not listed as the broker of record at the closing because the Fillmore broker, who was not named in court papers, told Kotliar and Schiglik that the initial listing period for showing the property had expired.
Sellers Mario and Meredith Geneve, of Colts Neck, N.J., refused to close the sale unless the documents reflected that Fillmore was the only firm involved, despite the buyers telling them that Talk of the Town had shown them the home, court documents show.
Talk of the Town sued the sellers in 2003, seeking $48,800, which included a commission of $43,000. The firm argued that the sellers acted in bad faith by purposefully cutting them out of the loop and withholding key information about the deal.
The case wound through New York State Supreme Court for years, in part due to a change in the judge and a change in lawyers for the plaintiff, Held said.
A representative for Fillmore and an attorney for the sellers said they had not read the decision and did not have any comment.
Jeffrey Peldman, president of Talk of the Town, noted that the courts have never afforded this type of protection to brokers.
“I’m very ecstatic to say the least,” Peldman said. “Finally the judiciary has come out with a ruling that really protects the hard work of the brokers. It’s long overdue.”
Steve Sladkus, chairman of the real estate department at law firm Wolf Haldenstein, said that brokers often try to claim commissions when they refer clients to a particular property, but in this case Talk of the Town made a strong case for actually entering direct talks on the deal.
“It appears based on the facts that the broker who was stiffed has definitely raised a triable issue of fact to show that he was the procuring cause of the sale to take place,” Sladkus said. “It doesn’t seem just or equitable based on these particular facts for someone to show a property, have even the seller acknowledge he showed the property and get totally shut out from earning a commission.”
A final decision on the award will be determined by a jury, Held said.