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Without Broker's License, Finder's Fee Unenforceable Says NY Court

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Just because you have a signed, written agreement doesn't automatically mean that you win your breach of contract case.

Let me explain.

Just over one year ago, I cheered a Nassau County trial court's decision that slammed a defendant who reneged on his word (written, mind you) to pay a plaintiff his finder's fee for bringing two sides together on a real estate deal. (See, "How to Prove a 'Finder's Fee' Case Under New York Law").

To be clear: There was no dispute that the defendant entered into the agreement or that he reneged on his word (or, to borrow the legal parlance, breached the contract). Rather, the central issue in the case is whether the contract was unenforceable as a matter of law.

"Why?" you ask.

Because Real Property Law 442-d provides that

"[N]o person  shall bring or maintain an action in any court of this state for the recovery of compensation for services rendered in the buying, selling, exchanging, leasing, renting or negotiating a loan upon any real estate without alleging and proving that such person was a duly licensed real estate broker or real estate salesman on the date when the cause of action arose."

Applying that statute, New York's Appellate Division, Second Department held as follows:

"Contrary to the Supreme Court's conclusion, this prohibition applies even if the services rendered are characterized as those of a "finder" (see Dodge v Richmond, 5 AD2d 593, 595-596; Sorice v Du Bois, 25 AD2d at 521; Real Estate Strategies, Ltd v Arington Realty Group, LLC, 2010 NY Slip Op 32296[U] [2010]; Feldbau v Klarnet, 109 Misc 2d 32, 35-36)."

The outcome of this case is somewhat disturbing: the defendant gets away with breaking his word (and contract).  

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