Skip to main content



Louis C. L’Heureux Real Estate v. Maragliano

2006 WL 1029652 (N.J. Super. Ch. Div. 2006) (Unpublished)

BROKERS; COMMISSIONS —A broker earns its commission when it produces a ready, willing and able buyer who enters into a contract with the seller and the transaction concludes by closing the sale, but if the buyer defaults, the broker is not entitled to the commission.

A seller and a real estate broker entered into a listing agreement. It called for a commission to be paid if the broker was able to produce a buyer capable and willing to buy the property, but only if the property was sold during the initial term of the listing agreement or if the property was sold within a 120 day extension period beyond the initial term to a buyer first brought to the seller’s attention by the broker during the initial term. During the initial term of the listing agreement, the broker produced a buyer. The buyer gave a deposit to the seller and entered into a contract of sale. The contract specifically referenced the broker’s commission. Closing was adjourned several times. Eventually, the buyer sent a time of the essence letter, but the seller continued to refuse to close. The buyer then sued for specific performance. In that suit, a lower court found that there was a valid contract of sale and the only reason closing had not taken place was because of the seller’s bad faith.

Under the doctrine of collateral estoppel, a later court may preclude re-litigation of an issue if that same issue: (1) is identical to an issue decided in an earlier proceeding; (2) the issue was actually litigated; (3) the court in the earlier proceeding issued a final judgment on the merits; (4) the determination of the issue was central to the prior judgment; and (5) the party against whom the doctrine is asserted was either a party or was in privity with a party to the earlier proceeding. The real estate broker, relying on the doctrine of collateral estoppel, claimed that because a prior court already ruled that the buyer and seller had a valid contract, it was entitled to its commission. The buyer claimed there was an issue as to whether a contract for sale existed on the terms as stated in the listing agreement. With that as background, the Court in this matter found that the earlier court had decided that there was a contract for sale, that resolution of that issue was central to the decision in that earlier proceeding, and that the seller had a chance to (and in fact did) litigate the issue. Therefore, the doctrine of collateral estoppel barred re-litigation of the question as to whether the buyer and seller had a contract and the seller could not now argue that the agent was not entitled to its commission based on there not being a contract.

A broker earns its commission when: (i) it produces a buyer ready, willing, and able to buy on the seller’s terms; (ii) the buyer and seller enter into a contract; and (iii) the transaction concludes by closing the title. If the buyer defaults, the broker is not entitled to commission. If the seller defaults, the broker has a valid claim. Although closing took place after the 120 day extension period, the agent was found to be entitled to its commission under the “efficient-producing cause” theory. Under that theory, a broker is entitled to its commission when it causes its customer, the buyer, to negotiate with the seller; there is no substantial break in the negotiations; and the transaction is later consummated. Here, the Court found that the contract for sale was signed as a consequence of the broker’s efforts; there were no substantial breaks in the negotiations; and the transaction was ultimately consummated.


MEISLIK & MEISLIK
66 Park Street • Montclair, New Jersey 07042
tel: 973-783-3000 • fax: 973-744-5757 • info@meislik.com