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FGH Realty, LLC v. Centex Homes, LLC

A-0404-07T2 (N.J. Super. App. Div. 2008) (Unpublished)

BROKERS; COMMISSIONS — There is no implied contract between a buyer of property and the listing broker, but that buyer may be liable to that broker for its commission if closing fails to take place by reason of the buyer’s breach of contract or the buyer’s frustrating conduct.

A buyer entered into a purchase agreement for a number of lots. A real estate broker, who had a commission agreement with the seller, sued the buyer for breach after it refused to close on the sale. The buyer argued that it owed nothing beyond release of the deposit money to the seller and that the broker was only entitled to its commission if the sale had closed. The lower court rejected the broker’s argument that the buyer had breached an implied contract that entitled it to the payment of the commission and found that the purchase agreement was properly terminated according to the terms of the agreement.

On appeal, the Appellate Division pointed out that there is no implied contract between a buyer of property and a broker, but that a buyer may be liable to a broker for its commission if the closing fails to take place by reason of the buyer’s breach of the sales contract or its frustrating conduct. Here, it found that the sales agreement was properly terminated as a result of the buyer’s default, but that the default did not constitute a breach because it was properly remedied when the buyer turned over the deposit monies to the property owner in accordance with the terms of the sales agreement. As a result, the Court affirmed the lower court’s ruling that the buyer was not liable to the broker for commissions.


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