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Prime Properties, Inc. v. Estate of Curry

A-2221-07T2 (N.J. Super. App. Div. 2008) (Unpublished)

BROKERS — If either a broker or principal dies, or becomes insane or bankrupt, a broker’s listing is automatically terminated unless the broker’s authority is coupled with an interest and that interest must be directly in the subject matter of the agency, and not just an interest in the proceeds which would have arisen if the broker’s agency power had been exercised.

A real estate broker received a phone call from a son-in-law of an owner and operator of a boarding kennel. The broker was informed that the owner was interested in selling the business because he was in poor health. The broker met with the son-in-law to discuss finding a buyer. Ultimately, the owner signed and dated a listing agreement and returned it to the broker. The agreement provided for a brokerage commission of seven percent of the sale price once the broker brought together a buyer and seller that resulted in a contract of sale. The owner died six weeks later.

Thereafter, a real estate agency advised the broker that it represented potential buyers of the property in an exclusive agreement. That agency ultimately received the entire sales commission at the closing of the property. The potential buyers acknowledged that they initially attempted to make an appointment with the original broker to see the property but never set a date and ultimately told the original broker in an e-mail that their plans had changed. After the closing, the broker asserted an equitable lien on the property and demanded a commission from the buyers’ attorney. After the funds were released to the real estate agency, the broker filed suit against the estate, the buyers, and the agency demanding the commission.

The lower court dismissed the complaint on summary judgment, holding that the agency relationship between the owner and the broker ended when the owner died. The court stated that an agency can only survive the death of the principal if it is coupled with an interest. The court said this would require that the agent have some interest, such as a security interest, independent of the power conferred upon him by the principal. In the instant case, the court found that the listing agreement created an interest only in the proceeds of the sale of the subject property, and that the agreement was not in effect at the time of sale due to the owner’s death prior to the sale. The broker appealed.

The Appellate Division affirmed, finding that under New Jersey law, if either a broker or principal dies, or becomes insane or bankrupt, the listing is automatically terminated unless the authority is coupled with an interest. The Court continued that such a coupled interest on the part of the agent must be directly in the subject matter of the agency, and not just an interest in the proceeds which would have arisen if the agency power had been exercised.


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