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Dolan Commercial Real Estate Services, Inc. v. Mana

A-1961-10T3 (N.J. Super. App. Div. 2011) (Unpublished)

BROKERS; COMMISSIONS — A listing broker is entitled to a commission only if it is the efficient procuring cause of the transaction, not by virtue of merely introducing a landlord to a tenant or introducing a buyer to a seller.

A business used the services of a real estate broker to help it locate additional space when needed. In early 2004, the business asked the broker to help find space for it. The broker presented it with an exclusive brokerage agreement, but the business did not sign the document. Nonetheless, the broker searched for suitable properties and presented the business with a list of available properties. The business decided the properties were not suitable for its needs because they intended to purchase, and not lease, a property. About a year and half later, the business decided that, due to its increased need for additional space, it would lease additional space. It retained another broker who showed it one of the same properties originally presented by the first broker. The second broker showed the property, negotiated a lease, and was paid a commission. The original broker, under the theory of quantum meruit, sued for a commission for the reasonable value of its services in initially introducing the business to the property it eventually leased. The business moved for summary judgment, arguing that the original broker was not entitled to a commission. The lower court, however, found that the original broker could recover on the theory of quantum meruit without showing that it was the efficient procuring cause of the lease transaction. On reconsideration, the lower court found that the original broker was required to show that it was the efficient procuring cause of the lease and that since it did not do so, it was not entitled to compensation.

The original broker appealed, but the Appellate Division affirmed, noting that, in real estate transactions, a broker is entitled to a commission only if the broker succeeds. A broker succeeds only if it is the efficient procuring cause of the transaction. A broker is not entitled to a commission merely by introducing a landlord to a tenant or a buyer to a seller. The Court agreed with the lower court that, based on the one-and half year period between the introduction by the original broker of the property and when the lease was signed, too much time had passed without sufficient effort by the original broker to encourage the business to lease the property. The second broker, not the original broker, was the one who engaged in negotiations and in the preparation of the lease without any involvement by the original broker. Therefore, the original broker was not entitled to a commission.


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