Case Law Summaries

Peter Hirschmann, Inc. v. Novick

• Opinion Date: December 15, 2000
• Real Property Law
• E-Mail

BROKERS; COMMISSIONS—Where a broker is entitled to a commission based upon a tenant’s exercise of a purchase option, the commission is also payable when an affiliate of the tenant purchases the property outside of the lease option.

A real estate broker arranged a transaction wherein a property owner leased property to a user and provided the user with an option to purchase the property. The commission agreement with the broker required the owner to pay a commission on the net rentals paid by the tenant or the then selling price, if the option were exercised. The landlord subsequently formed a limited liability company and transferred title to the property to that company. It then sold the property to an affiliate of the tenant. The sale took place within the ten-year period covered by the terms of the commission agreement, although it was not a sale pursuant to the lease. The Court felt that both the commission agreement and the lease made it clear that the broker was due a commission in the event that the tenant or its assignee purchased the property. It found the evidence to be overwhelming that the buyer was related to the tenant and pointed out that the “Closing Disbursements Sheet was signed by [a principal of the tenant] and [the tenant and its principal] signed as guarantor.” Consequently, the Court held that the sale of the property was to a successor and/or assignee of the tenant,” even though the purchase option in the lease had not been assigned to the affiliate.

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