Case Law Summaries

Murray v. Fisher

• Opinion Date: November 3, 2000
• Real Property Law
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BROKERS; COMMISSIONS—Where it is clear that a seller and a buyer have not reached a meeting of the minds, it is not bad faith for a seller to withdraw from negotiations. In such a case, a broker is not entitled to a commission.

A real estate broker approached an elderly property owner with a letter signed by a County government representative offering to purchase the owner’s property. The letter contained a number of terms and included a request that the property owner direct her attorney “to work with County Counsel to frame a Contract of Sale which will be signed by both parties… .” There was no mention of a brokerage commission or language pertaining to the broker. The property owner and the County were unable to agree to terms specifically because the County wanted to include a provision requiring the property owner to pay a brokerage commission and the property owner refused to sign a contract “with any reference to the brokerage commission.” Although the property owner denied signing a listing agreement with the broker, she admitted for the purposes of the summary judgment motion that she had signed it and that the listing agreement contained specific details and a provision that if the property was sold through the broker’s efforts, there would be a six percent commission due. The lower court concluded that the broker earned no commission “because there had been no meeting of the minds between the County and [the property owner] over material contract terms.” The Appellate Division agreed. Even though it is generally true that there must be a contract of sale as a precondition for earning a commission, nonetheless, a broker generally earns a commission only when it produces a ready, willing, and able purchaser that is willing to buy on the terms fixed by the owner a binding contract results and the purchaser completes the transaction by closing the title in accordance with the provisions of the contract. Further, “there exists in every contract an implied covenant of good faith performance and fair dealing.” Nonetheless, the Court believed that there was simply no evidence that the property owner and the County had a meeting of the minds with respect to all of the essentials of a contract. The letter from the County was characterized as constituting only an agreement to agree. It did not contain any mention of the property’s owner obligation to pay a commission out of the proceeds of a sale which was substantially less than the property owner’s asking price. When it became clear that the property owner was unwilling to pay the commission and the County was unwilling to pay more than it had offered to purchase the property, “it became equally clear that the parties failed to have a meeting of the mind.” Therefore, there was “no evidence that [the property owner’s] refusal to enter into a contract was a result of any bad faith or wrongful conduct on her part.”

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