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Broker Not Entitled to Commission - No Extension, Not Procuring Cause

As the economy has languished, many property sellers and landlords have experienced extensions of property listings. In many cases, these extensions have actually exceeded the terms of the listing agreements with their brokers. This situation can raise some complex questions of exactly what listing terms remain in place and what commission, if any, the real estate broker can recover.

A recent case in the United States for the Eastern District of Virginia, Grubb & Ellis v.  Potomac Medical Building, LLC, gives some guidance on these questions. The case ended in a bench trial and resulting forty page memorandum opinion, so the case is certainly long on facts and detail. There are a few important take-away points, especially when one takes into account the context of litigation in the "Rocket Docket":

  • The original listing agreement permitted only written extensions - while there were continued dealings between the parties, the court found there was no extension of the original listing in large part because there was no written extension
  • The broker’s continuing efforts to lease the property did not create a new listing agreement
  • While the initial broker brought the eventual tenant to the table, that tenant was not willing to close on the landlord's terms so the broker was not the "procuring cause"

 

  • Shareholder

    Timothy Hughes is the managing shareholder of Bean, Kinney & Korman. He also represents clients in construction and commercial litigation, as well as corporate, contracts and general business matters. With over 20 years ...