Recovering Unpaid Commissions in a Commercial Real Estate Transaction

Commercial real estate transactions can be very complex. Disputes may occur between various parties in the deal and can be challenging to resolve. One common conflict in commercial real estate transactions involves the payment of broker commissions. In certain situations, the commission owed to the broker may be in dispute and the broker needs to take legal action to recover his commission.

Procuring cause in real estate.  Identifying the procuring cause agent is often at the heart of broker commission disputes. Procuring cause refers to the party who is ultimately responsible for the sale of the property. In other words, it is the agent who initiated a series of events that resulted in the deal closing. This concept applies to both residential and commercial sales and to buyers and tenants. In Georgia, the procuring cause agent is the party who finds a buyer or tenant who is ready, willing, and able to buy or lease the property, or who offers to buy or lease in accordance with the seller’s or landlord’s terms. Determining whether a broker is the procuring cause is a question of fact that must be assessed when looking at the circumstances of the case. Generally, if an owner fails to pay a commission after the transaction has closed and the broker has performed all of his duties, then the owner is liable for the commission fees. However, owners and sellers may still claim that the broker did not perform certain actions and therefore was not the procuring cause and is not entitled to a commission.

Verbal listing agreements. Most commercial real estate agreements are formalized in writing given the nature of these transactions. However, verbal agreements about certain matters may still be made and this can present a challenge in the courtroom. Verbal real estate listing agreements may be valid under the contract law of the state, but whether they can be enforced in court is a more complex matter. The best strategy is to put commission agreements in writing. If any aspect of the agreement is verbal, it is best to keep supporting documentation (such as emails) and to have witnesses present who can attest to the parties’ agreement.

The experienced team of attorneys at the Law Offices of Mark Weinstein, P.C. can help you litigate your real estate claims. Contact Mark Weinstein and his colleagues at (770) 888-7707 to find out how they can advise you.