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R.A. Depetro Realty Group v. Mar Realty Associates

A-4104-98T2 (N.J. Super. App. Div. 2000) (Unpublished)

BROKERS; LISTING AGREEMENTS—A property management agreement that contains a provision for leasing commissions will not be set aside just because that commission provision is not limited to a definite term.

A company and an individual had a management agreement with some real estate companies. The agreement provided that “Owner agrees that upon any leasing of the premises at any time during the period of this Agreement, Agent shall have” the right to negotiate leases and to receive a leasing commission equal to six percent of the aggregate net basic rental received for the full term of the lease and all renewals thereof. Further, the management company was entitled to a sales commission on the sale of the land and buildings. The real estate company, based solely on the language of the leasing provisions, argued that the agreements were real estate listing agreements and were controlled by the provisions of the Real Estate Licensing Act. Specifically, the property owners contended that because this particular section of a very long management agreement contained no termination date, the Real Estate Commission should have imposed sanctions on the management company. It contended that because of this deficiency, the entire management agreement was contrary to public policy, illegal, and therefore unenforceable. According to the Court, the “contention rests on the premise that section 3b [of the contract] is severable from the entire contract and should be construed in its isolated context and not in the context of overall contractual scheme.” The Appellate Division found that contention to be unpersuasive. The management agreement was a working document in which the provisions for leasing services constituted only a small part. The Court felt compelled to consider the contract as a whole and not to isolate particular words, phrases, or paragraphs. “Consequently, a paragraph cannot be isolated from the contract as a whole but must be viewed in the overall probable intent of the parties.” Applying those principles, the Court was satisfied that the agreements in issue were not listing agreements, and, therefore, they were not unenforceable due to the absence of a definite termination date. “The agreements, read as a whole in light of the circumstances under which the parties entered into them, demonstrate an express general purpose that encompass services on plaintiffs’ part well beyond those of a listing agreement.” Further, the parties appeared to be sophisticated business entities that worked out a management agreement that included, as one aspect of it, entitlement to rental commission for services rendered. That one facet did not transform the entire agreement into a listing agreement.


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