Bussel Realty Corp. v. North Metro Real Estate, Inc.

A-0873-97T2 (N.J. Super. App. Div. 1998) (Unpublished)
  • Opinion Date: October 13, 1998

BROKERS; COMMISSIONS—Even though a co-broker is not an efficient, procuring cause of a replacement lease, it is entitled to its commission share if the terms of the co-brokerage agreement expressly so provide.

An industrial park was represented by an exclusive leasing agent. That leasing agent had a co-brokerage commission agreement with a second real estate broker. The co-brokerage agreement included the following “renewal-expansion” clause: “In the event that the [prospective tenant] or any of their affiliates, associates, or successors, renews or extends the lease or any future leases, exercises an option, takes additional space or relocates with Owner/Landlord or purchases, [leasing agent] agrees to pay [real estate broker] a commission equal to 2.5% of the total aggregate net rentals or purchase price.” The broker introduced the prospective tenant to the industrial park and, following negotiations, a lease was signed. About a year later, another company, in the same business as the tenant, was attracted to the industrial park and eventually met with the tenant. This resulted in an acquisition by the second company of the tenant, whereupon the tenant was merged into the second company. The following year, the surviving company entered into a new lease which served to extend the term of the original lease and to expand the total leased space to include additional buildings in the industrial park. The real estate broker was not involved in any of the subsequent transactions, but claimed that it was entitled to a commission based upon the co-brokerage agreement. Even though the Court found that the new company’s decision to execute the new lease was brought about neither by the existence of the original lease nor by the presence of the original tenant at the industrial park, it still found that the co-broker was entitled to a commission. The provision of the co-brokerage agreement having to do with renewal and expansion governed the result and it did not matter that the co-broker was not an efficient, procuring cause of the subsequent transaction nor that it performed no services of value related to that second lease.