Newmark and Bank Co. filed this lawsuit against Capitol Hill Group, alleging the real estate brokerage is entitled to $454,025 in sales commissions and consulting services involving two properties.

The first property, the “Town House Land,” was sold to Holladay Corp. for $3 million. Newmark claims a 1 percent sales commission of $30,000 on this sale. The second property, the “Apartment Building Land,” was sold for $13.3 million. The sale was never completed, yet Newmark claims a 3 percent commission of $399,000.

Purchase Bob Bruss reports online.

Newmark bases its claim on the fact that it provided consulting services to Capitol Hill Group and sent two proposed agreements to the seller, which were never signed. Newmark, however, continued providing consulting services, and the sales contracts said the seller shall be solely responsible for any fees owed to Newmark.

When Newmark sued land seller Capitol Hill Group, the defendant denied any written listing and pointed to the applicable statute that requires a written listing contract before any sales commission becomes payable to a real estate broker. Newmark argued it should at least be paid on a “quantum meruit” basis for advisory services rendered although the firm was not the “procuring cause” of the sale to Holladay.

If you were the judge, would you order Capitol Hill Group to pay sales commissions to Newmark based on its proposed but unsigned consulting services agreement?

The judge said no!

The only consulting services agreement that defendant Capitol Hill Group acknowledges is an oral agreement to pay Newmark at the rate of $125 per hour, the judge said. Newmark has failed to present any signed listing agreements for the two properties, he emphasized.

The statute is very clear, the judge said, that, “a licensee shall not receive payment of a commission in the absence of a written listing agreement.” Without a signed listing contract, he noted, the Statute of Frauds prevents a real estate broker from receiving any sales commission on a completed property sale.

Therefore, Newmark is not entitled to any sales commission on the completed sale of the “Town House Land” or the uncompleted “Apartment Building Land,” the judge ruled. However, Newmark is entitled to a $125 per hour fee for consulting advisory services rendered to Capitol Hill Group, based on the oral agreement, the judge concluded.

Based on the 2005 U.S. Bankruptcy Court decision in In re Capitol Hill Group, 320 B.R. 460.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

***

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