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Joseph v. Lehrer

A-1701-02T3 (N.J. Super. App. Div. 2003) (Unpublished)

BROKERS; COMMISSIONS—Under certain circumstances, a broker’s break-up fee is appropriate and it may be more than what a sales commission would have been.

In litigation between partners of a real estate company, the Court appointed a broker to sell the partnership’s property. The order provided for a commission of three percent of the purchase price, but “[i]f the property [was] withdrawn from sale for any reason including, but not limited to any agreement between the parties, [the broker] shall be entitled to a breakup fee to be set by the court.” The underlying litigation was settled and one of the partners was bought out for a fraction of the value of the property. The selling partner contended that the broker was entitled to its commission only on the amount of money that he received in the sale. The broker contended that it was entitled to a full commission on the value of the property, or in the alternative, the Court had properly set a breakup fee even though it was more than double of the what the selling partner wanted to pay.

The Court made special note that the broker had extensively marketed the property and because of its efforts, has obtained a number of bids which, in effect, established the value of the property. The “breakup fee” was intended to pay for significant work that might affect the value of the building in the partnership even though the parties might fully settle their dispute. With that in mind, the Appellate Division believed that the lower court did not abuse its discretion when it set a breakup fee under these circumstances even though the breakup fee properly exceeded what the commission would have been had it been paid only on the amount received by the selling partner.

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