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

(condensed from ruling 73131 of the Eretz Hemdah-Gazit Rabbinical Courts)


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).

Ruling: Halachically, there are two possible grounds to obligate one who used the services of an agent without explicit agreement to pay. One is implied acceptance of payment, especially when it is customary to pay for such a service (see Shut Harashba IV:125). The other is neheneh –benefit received from another even when the latter worked without authorization (see Bava Metzia 101a). Even within the rules of neheneh, there must be an assumption that the worker did not intend to work for free. The Rama (Choshen Mishpat 264:4, contrary to 363:10; see Pitchei Choshen, Sechirut 8:31) says that when one provides a service, we normally assume that it was for a fee. This is generally true even if a relative provides the service (Shulchan Aruch, CM 246:17). In this case, Mr. A was anyway acting on his employer’s behalf.
Based on testimony and other indications, it is apparent that plshould have known all along that he was expected to pay an agent’s fee. He admitted that pl told him before he signed the contract with Mr. B, and his claim that he had already signed a rental contract with Mr. C is not corroborated by the facts. The law does state that an agent is entitled to a fee only if a contract was signed. In general, this is a logical law regarding cases where it is questionable whether the buyer knew the agent was acting as an agent. In our case, though, we have determined that he was aware, and it is difficult to apply the law to exempt one who is obligated to pay based on halacha. Furthermore, the law applies only to an agent for real estate. In this case, the purchase of the business from Mr. B was a sale of reputation, not a sale or rental of land, and we have seen no proof that the law exempts such a buyer when there is no contract. Therefore, def has to pay for the transaction between Mr. B and himself.
Next time, we will discuss the rate of fee and the agency for the rental from Mr. C.