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Sadri Realty v. McCort

A-6145-97T3 (N.J. Super. App. Div. 2000) (Unpublished)

BROKERS; COMMISSIONS—A tenant that agrees to pay a rental commission upon moving into a particular apartment is still obligated to pay the commission if, after the broker rejects the tenant’s application because of credit concerns, the tenant negotiates directly and moves in.

After a real estate broker showed an apartment to prospective tenants, particular prospective tenants signed an “application” in which they agreed to pay the broker a commission “in the event [they] move[d] into the premises.” The “application” provided that the landlord reserved the right to reject the “application” for any reason and indicated that should the landlord do so, the security deposit would be returned. When the credit check came back, the broker recommended to the landlord that it not enter into a lease with the prospective tenants. As a consequence, the deposit monies were returned. Thereafter, the prospective tenants contacted the landlord directly. After speaking to the broker, the landlord decided to lease the apartment to the applicants despite the credit report. The lower court concluded that the tenants had no obligation to pay the broker a commission once the broker rejected the application and that thereafter the tenants were free to make their own arrangements with the landlord. The Appellate Division disagreed, rejecting the lower court’s reliance on a prior case which involved allegations of tortious interference with prospective economic advantage by one real estate broker against another. Here, the broker’s action was not against the landlord, but sounded in contract against the tenants who signed the brokerage agreement “in the event [they] move[d] into the premises.” Once the tenants moved into the apartment and did not pay the broker, they breached the commission agreement and the broker became entitled to damages.


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