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Beit Midrash Series P'ninat Mishpat

Chapter 365

Real Estate Agent’s Fee Without Clear Agreements – Part II

The plaintiff (=pl) is a real estate agents’ firm, which knew that Mr. B, a catering hall proprietor, wanted to sell his business. Mr. A, one of pl’s agents, passed on this information to his brother-in-law (=def). Mr. A and others at pl were involved in negotiations between def and Mr. B, although they never met at pl’s office, and def was not asked to sign a contract with pl. During negotiations, it surfaced that Mr. C owns the physical hall, so that def had to make a rental agreement with Mr. C to complete the purchase (basically, of its name/reputation) from Mr. B, and pl helped in this. Pl is asking 10% (100,000 shekels) for buying the catering business and $40,000 for the rental deal (two months’ rent). Def claims that pl does not deserve pay because according to the law, they must have a signed agent’s contract. Also, the idea of an agent’s fee was raised only soon before the signing, after def already had a binding agreement with Mr. C on rent. Finally, the sides never agreed on the rate of any agent’s fee, and the sum claimed is exaggerated and ever-increasing (as the legal process proceeded).
Various RabbisIyar 2 5776
101
Click to dedicate this lesson
(condensed from ruling 73131 of the Eretz Hemdah-Gazit Rabbinical Courts
P'ninat Mishpat (576)
Various Rabbis
364 - Real Estate Agent’s Fee Without Clear Agreements – Part I
365 - Real Estate Agent’s Fee Without Clear Agreements – Part II
366 - Agent’s Fee for a Sale Cancelled After Contract
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Case: The plaintiff (=pl) is a real estate agents’ firm, which knew that Mr. B, a catering hall proprietor, wanted to sell his business. Mr. A, one of pl’s agents, passed on this information to his brother-in-law (=def). Mr. A and others at pl were involved in negotiations between def and Mr. B, although they never met at pl’s office, and def was not asked to sign a contract with pl. During negotiations, it surfaced that Mr. C owns the physical hall, so that def had to make a rental agreement with Mr. C to complete the purchase (basically, of its name/reputation) from Mr. B, and pl helped in this. Pl is asking 10% (100,000 shekels) for buying the catering business and $40,000 for the rental deal (two months’ rent). Defclaims that pl does not deserve pay because according to the law, they must have a signed agent’s contract. Also, the idea of an agent’s fee was raised only soon before the signing, after def already had a binding agreement with Mr. C on rent. Finally, the sides never agreed on the rate of any agent’s fee, and the sum claimed is exaggerated and ever-increasing (as the legal process proceeded).

[Last time, we saw that def has to pay the agent’s fee for purchasing the business from Mr. B despite the fact that there was no contract and that the exact amount of the fee was not discussed.]

Ruling: While pl claimed that it is standard to receive a 10% fee for the sale of a business, he did not bring any proof that this indeed is the going rate. Def claimed that the original amount that pl requested after the sale went through was 5%, and that only "in honor" of the adjudication did his claim rise to 10%. He also did not bring proof of going rates for commercial deals. In general, when price is not discussed, one pays the going rate, and when there is a range of prices, the defendant pays according to the lower edge of the range (Shulchan Aruch, Choshen Mishpat 332:1). Def originally agreed to pay 20,000 shekels and said that when he discussed, with his lawyer before the deal, the possibility of paying a fee, the lawyer said that it would not end up being no more than 50,000 shekels. When a certain fact does not appear to be determinable, beit din is authorized to set it based on compromise (ibid. 12:5). In this case, beit din decides on 50,000 shekels including V.A.T.
Although we obligated def to pay an agent’s fee for the purchase of the business from Mr. B, we will not do so for the rental of the hall from Mr. C, as there are several differences between them. First, the law requiring payment for agents only when the client signs an agent’s contract certainly applies to real estate rentals. In this case, it was also far less clear that there was a relationship of agent-client. For one, defdid not find out about Mr. C from pl, but as part of the negotiations with Mr. B. Secondly, pl became involved in negotiations with Mr. C as part of their effort to bring about the purchase of Mr. B’s business, and so it was not clear that they were acting as agents in regard to def¬-Mr. C. These factors make it unlikely that def has to pay pl an agent’s fee for their involvement in the rental from Mr. C.



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