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Case: The defendant (=def), a non-profit organization, was looking to buy headquarters in a major Israeli city. The plaintiff (=pl), who works as a real estate agent, suggested a building and arranged the first meeting to see it, sending a representative in his place. Subsequently, pl communicated his willingness to help promote the deal and his expectation for a real estate fee. Def bought the property for 60 mil. NIS without pl’s further involvement. Pl seeks a 2% fee on it. Def deny pl deserves it because he was not critical to the purchase, he did not have them sign a realtor’s contract, and he is not an Israeli-licensed realtor (he is licensed in a European country). Ruling: ]Last time we saw that pl deserves a realtor’s fee despite the lack of a signed contract.] The question now is how much def should pay. When no rate of pay is agreed upon, a worker is paid according to the standard practice (see Shulchan Aruch, Choshen Mishpat 331:1). This is the case even if the employer claims but cannot prove that it was agreed to pay less (R. Akiva Eiger ad loc.). Regarding real estate agents, the accepted rate is 2% of the price of the property (see Eretz Hemdah-Gazit ruling 82141). However, this is not the case when the property is much higher priced than a single-family home is. In fact, pl invoked the words of a rabbi with whom he consulted, citing him as saying that pl was the “effective factor” in the sale, without pointing out that in the same letter, that rabbi stated that pl would not be entitled to more than 1%. In several Israeli court rulings, which provide a window into the local practice, 1% is brought as the standard and highest rate for agents in large real estate deals. There is reason to reduce the amount beneath the standard of 1%. First, in a communication that pl sent to def reminding them that he expects payment for his work, pl wrote that he would make the price fair, which implies that he would work out some sort of reduction from the maximum amount, which we have seen is 1%. Furthermore, pl made a conscious decision, one which beit din discourages, not to sign his clients to a contract, which states the rate of payment agreed to. If pl were to receive the maximum fee without a signed contract, that would give him an advantage over those who follow the law, and show less “friendliness” by making people sign. Furthermore, in ruling 72059 of Eretz Hemdah-Gazit, the dayan pointed out that when a contract with a rate stated is used, it gives the parties opportunity to negotiate the rate, which not infrequently happens. By not having the contract signed, if the agent will receive the full amount, he can effectively prevent that negotiating from taking place, which, again, gives him an unfair advantage. Therefore, beit din chooses to award pl 0.82% of the price of the property.
P'ninat Mishpat (834)
Beit Din Eretz Hemda - Gazit
861 - P'ninat Mishpat: Complaints about Contractor’s Work – part II
862 - P'ninat Mishpat: Realtor’s Fee on Large Commercial Building – part I
863 - Complaints about Contractor’s Work – part II
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