Del Tufo v. Guttuso

A-3508-96T3 (N.J. Super. App. Div. 1998) (Unpublished)
  • Opinion Date: February 10, 1998

BROKERS; COMMISSIONS—To be enforceable, an agreement to pay a real estate brokerage commission must satisfy the Statute of Frauds. Denominating a commission as a “gift” or “facilitation fee” does not negate it as a commission. Collecting a commission from one party while being compensated in a different capacity by the other party is barred by statute.

A contract of sale for real property was assigned to a third-party developer. Notes from a discussion that took place prior to execution of the contract indicated that the buyers agreed that if they sold the property prior to development, they would pay “a 10% commission” to the broker. Based on these notes, the real estate broker claimed he was entitled to 10% as a “facilitation fee,” rather than as a commission, apparently because any agreement to pay commission is subject to the real estate broker statute of frauds. The lower court concluded that the handwritten notes from the discussion failed to comply with N.J.S. 25:1-9 (which has been replaced by N.J.S. 25:1-166), which requires an enforceable writing for a broker to obtain commission for selling or exchanging real estate. The Appellate Division agreed that the lower court properly found that the 10% sought by the broker was barred by the broker statute of frauds due to the lack of a signed writing. In rejecting the broker’s “facilitation fee” argument, the Court cited the language of the discussion notes, which expressly stated that the 10% was a “commission.”

The Court also denied the broker’s “quantum meruit” claim because the broker had already received a $25,000 “gift” from the third-party developer. The fact that this payment was recited as a “gift” in the contract of assignment between the buyer and the third-party developer was given no weight by the Appellate Division. To the Court, the “gift” was a commission. Because N.J.S. 45:15-17(i) prohibits a broker from collecting a commission in a transaction while representing either party in a different capacity for consideration, the “facilitation fee” sought from the buyer was barred. In other words, even had the meeting notes satisfied the statute, the broker still could not collect from the buyer because the broker had already received gift money from the third-party developer.