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Gebroe-Hammer Associates, Inc. v. Sebbag

385 N.J. Super. 291, 897 A.2d 353 (App. Div. 2006)

BROKERS; STATUTE OF FRAUDS—Brokerage agreements for the sale of mortgages need not be in writing.

A buyer utilized the services of a broker in connection with the purchase of a promissory note held by a lender. The buyer and broker entered into an oral agreement, whereby the buyer agreed to pay the broker a commission. The broker forwarded a confirming letter agreement to the buyer, but the buyer never signed it. The buyer then communicated directly with the lender to complete the transaction and never paid the commission. The broker sued and the jury found in the broker’s favor. The buyer appealed, arguing that the Statute of Frauds, N.J.S.A. 25:1-16(b), provides that a broker is not entitled to a commission unless there is a written agreement. Under section (d) of that statute, an oral agreement may be enforceable, but only if the broker serves the buyer with written notice within five days after the oral agreement is reached and before the sale is completed, and, before the buyer rejects the arrangement, the broker works to complete the sale. The buyer argued that since the broker never sent the written notice, it was not entitled to a commission. The broker argued that the Statute of Frauds did not apply in this transaction since under section (b) of the statute, the sale of mortgages is excluded from the requirement of a written agreement.

The Court affirmed. It found that the two sections of the Statute of Frauds are to be read together, and that section (d) of the statute that permitted the limited enforcement of oral agreements only applied to instances where the broker’s original agreement needed to be in writing. The Court noted that under section (b) of the statute, brokerage agreements for the sale of mortgages were not required to be in writing. Therefore, section (d) providing circumstances for the limited enforcement of oral agreements did not apply.

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