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How the Terms of a Listing Agreement Allowed a Florida Broker to Pursue a Claim for Unpaid Commissions

With anything that contains considerable minutiae, it is said that the “devil is in the details.” This can definitely be true of contractual agreements. In the case of one broker’s dispute with a developer, the courts allowed the broker to proceed with its claim for unpaid commissions precisely because of the details in the listing agreement the broker and a developer signed. That agreement’s details were enough to establish that the broker was more than just a general unsecured creditor of the developer, according to a Third District Court of Appeal decision published recently.

The underlying deal started out as many real estate deals begin. A developer and a broker signed a listing agreement in 2004 related to the developer’s new project. The contract called for the broker to receive a commission for each unit for which it brokered a sale.

The broker eventually secured 100 purchasers, and the purchasers’ deposits were placed in escrow. Eventually, though, as the recession deepened, 79 of the 100 deals failed to close. The developer, however, kept all of those deposits, instructing the escrow agent to pay it the full $2.4 million in deposit money that had been in escrow. The developer took that $2.4 million and submitted it to its lender as a payment on a $44 million construction loan.

The broker sued, alleging that the developer was unjustly enriched by keeping the deposit money without paying anything to it. The developer argued that the broker had no ownership interest in that deposit money and that the lender had “first priority interest,” meaning that the developer’s paying the full $2.4 million to the lender was wholly proper.

While the trial court ruled against the broker, concluding that it had no ownership interest in the deposit money and was, at best, a “general unsecured creditor,” the appeals court ruled differently. The key to the outcome in favor of the broker was the way in which the listing agreement’s terms were written. If the contract provisions had not stated an exact source from which the broker was to receive its commissions, the broker would have been no better than a general unsecured creditor and would not have had an ownership interest. However, in this agreement, the contract stated that the broker was still entitled to receive a commission from a sale that didn’t close as long as the developer kept that buyer’s deposit. The document also said that the broker was “to be paid from… retained deposits when a unit does not close.”

This was a clear identification of a particular fund from which the broker was to be paid. That identification and particular specificity meant that the broker did have an ownership interest, and it was allowed to pursue its case for the payment of its commissions.

Whenever you find yourself locked in a commercial dispute, it is important to have counsel experienced in these matters. The South Florida commercial litigation attorneys at Stok Kon + Braverman have been helping businesses, whether plaintiffs or defendants, for many years as they pursue or defend their interests in commercial litigation.

Contact us online or by calling (954) 237-1777 to schedule your consultation and find out how this firm can help you protect your interests.

More blog posts:

New York Broker Gets New Opportunity to Prove that It Was Entitled to Commission in Central Florida Commercial Lease Renewal, Florida Business Lawyers Blog, Feb. 19, 2016

Commercial Property Broker Entitled to Enforce Lien to Collect Commission on Sale, Florida Business Lawyers Blog, Feb. 3, 2015

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