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Sammarone v. Bovino

395 N.J. Super. 132, 928 A.2d 140 (App. Div. 2007)

BROKERS —When a property owner induces an unlicensed individual to enter into a brokerage agreement thinking that the unlicensed individual could not collect because he or she was unlicensed, the owner will not be permitted to benefit from such wrongful behavior and may be liable to pay an otherwise uncollectible commission.

A man sought to enforce an oral contract with real estate developers, in which they promised him compensation for introducing them to the owner of a valuable property they wished to purchase. The real estate developers moved to dismiss the claim. They claimed that since the man was not a licensed real estate broker, he was not entitled to sue for a commission. The developers relied on the Real Estate Brokers and Salesman Act, N.J.S.A. 45:15-1 to -42, which prohibits unlicensed persons from acting as a broker and does not allow unlicensed brokers to sue for commissions. The lower court, relying on the statute, dismissed the complaint. The “broker” appealed, and the Appellate Division reversed. It noted that a motion to dismiss a complaint for failure to state a claim should only be granted in the “rarest of instances” if, after an in depth examination and with liberality, no cause of action can be gleaned from the facts. In reviewing the claim, the Court noted that the purpose behind the Real Estate Brokers and Salesman Act is to protect consumers by excluding dishonest and unscrupulous people from the real estate business. However, the Court also noted that the New Jersey Supreme Court has declined to permit sophisticated real estate professionals from using the statute as a sword, when the statute was intended to be a shield to protect consumers. In this case, the Court noted that the developers were sophisticated real estate developers who, years before this agreement, were involved in litigation with an unlicensed broker. In that case, the developers were able to defeat the broker’s claim for a commission on the basis that the broker was not licensed. In this case, the developers, who were stifled in earlier attempts to buy the property, used the “broker” as a way to meet with the seller and eventually buy the property. They were not previously able to meet with the seller to negotiate a sale and used the “broker” to make inroads with the seller. The developers negotiated a commission agreement of three percent of the purchase price, as opposed to a higher commission, specifically because the person was not a broker and a letter from the “broker” acknowledged that fact. In essence, the Court found that the developers entered into the agreement with the knowledge that they had previously defeated a claim from an unlicensed broker. According to the Court, the developers induced the man to enter into a brokerage agreement thinking that he could not collect since he was unlicensed. Thus, it found that they should not benefit from their wrongful behavior. The Court did not determine if the “broker” could ultimately prevail, only that his claim should not have been dismissed.

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