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Commercial Property Broker Entitled to Enforce Lien to Collect Commission on Sale

Miami_Shores_FL_Grand_Concourse_AptsA ruling from the 3d District Court of Appeal resolving a commercial real estate sale dispute sheds some relevant light on brokers’ enforcement of liens for the amount of the commissions owed them. The ruling clarifies that the Florida Commercial Real Estate Sales Commission Lien Act is not the only mechanism for seeking a lien, and the statutes expressly allow liens that are permitted by parties’ contractual agreements.

The case spawning the ruling centered on the commission that J. Milton Dadeland, LLC allegedly owed to Abala, Inc. as a result of the sale of a parcel of commercial real estate. Colony RB-GEM owned an apartment complex, for which it retained Abala to broker a sale of the property. In exchange, Abala would receive 6% of the sale price.

J. Milton ultimately purchased the property, agreeing to a purchase price of $24.5 million. Abala filed a lien for $1.47 million for commission it was owed. The purchaser sued to cancel the lien, and the broker countersued the purchaser. The trial court ruled in favor of the broker, leading the purchaser to appeal. The purchaser argued that the only type of lien that would be valid under the law is a “lien on the proceeds of the sale,” as provided by the Lien Act. Abala did not comply with this statute’s many requirements, including several mandatory notices and disclosures.

The appeals court rejected this argument. While the purchaser was correct that the broker had not complied with the Lien Act’s procedural requirements, that did not matter because the broker was not claiming its lien under the terms of the Lien Act. The purchaser’s challenge to the broker’s loan was predicated on the erroneous idea that the only valid lien was one obtained under the auspices of the Lien Act. However, the existence of the lien remedy spelled out in that statute did not bar brokers from obtaining other types of liens. To back up this conclusion, the appeals court pointed out that the Lien Act text at no point states that it was designed to be an exclusive remedy.

The court also pointed out that, elsewhere in the statutes, the Legislature demonstrated a clear intent to allow brokers to seek liens other than those provided by the Lien Act. Section 475.42 of the Florida Statutes specifically allows brokers to obtain liens “where expressly permitted by contractual agreement or otherwise allowed by law.” In Abala’s circumstance, its contract gave it the right to collect a 6% commission and to obtain a lien for the full amount of its commission. This made the Abala lien one that was “expressly permitted by contractual agreement” and therefore authorized by Section 475.42.

All sides hope for a smooth, amicable outcome when they enter into a commercial real estate business transaction but, as Abala’s case shows, such is not always the case. For knowledgeable answers to your questions and determined representation for your disputes involving commercial real estate, talk to the Florida real estate attorneys at Stok Folk + Kon. Our attorneys are ready to assist you in maintaining your business position and defending your rights.

Contact us online or by calling (305) 935-4440 to schedule your consultation.

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