Sellers' Recourse against Brokers

The New York Times
Real Estate Q&A

Q.: What recourse does a seller have against a real estate broker, if the purchaser backs out of a sales transaction before the closing?
Gregory W. Synome, Manhattan

A.: "In most cases none," said Eric Davis, a Manhattan lawyer who specializes in real estate law in New York and New Jersey. "Generally, the only way a seller would have recourse against a broker would be, if the broker was responsible for the buyer backing out of the deal."

"On the other hand," Mr. Davis said, "there might be times, when the tables could be turned and the broker might have recourse against the seller, if the buyer backs out of the deal before closing. In New York, if there is no written agreement between the broker and the seller, the broker's commission is payable upon closing of title. However, when there is a written agreement, that agreement may contain a clause that makes the commission due at the time the broker produces a 'ready, willing and able buyer'".

"In New Jersey a broker's commission is only due, when the transaction has been completed. In Connecticut, however, the law provides even greater protection for brokers," said William Selsberg, a lawyer in Stamford. "There, the commission is earned at the moment a ready, willing and able buyer is produced, unless a written agreement specifically provides that the commission is payable upon closing.