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Advantage Plus Associates of Hunterdon County, Inc. v. George

A-6568-02T5 (N.J. Super. App. Div. 2004) (Unpublished)

CONSUMER FRAUD; BROKERS—A real estate broker is not guilty of consumer fraud when its sales representative orally promises that a listing owner can terminate the commission agreement after less time than stated within the agreement if the broker affirms that promise and the attempted termination by the listing owner occurs even before the end of the shorter time period.

A homeowner entered in a listing agreement with a broker. Before executing the listing agreement, the broker’s representative told the homeowner that “notwithstanding the six-month duration term contained in the written agreement,” the homeowner would be able to terminate the agreement “if, after ninety days, [it was] dissatisfied with the broker’s performance.” About sixty days later, the homeowner told the broker of its unhappiness with the broker’s performance, but about ten days later, the homeowner entered in a sales agreement for its home. The next day, the broker confirmed that it would honor its representative’s oral agreement.

The homeowner refused to pay the commission, and the broker sued. In response, the homeowner argued that the representative’s “oral promise to allow a termination after ninety days constituted a violation of the Consumer Fraud Act.” The lower court found in favor of the broker, and the Appellate Division agreed. Each court believed that the representative’s representations regarding early termination of the agreement “did not constitute unconscionable conduct of the type prohibited by the Consumer Fraud Act. To constitute an actionable misrepresentation, among other things, the statement must be false and material to the transaction.” Each court believed that the statement was neither false nor material. After all, the broker said it would adhere to its representative’s representations. Moreover, it was immaterial whether or not the homeowner could terminate the agreement after ninety days when it obtained a buyer sixty-three days after executing the listing agreement.

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