Broker compensation rights

On Behalf of | Aug 10, 2022 | Commercial Real Estate, Contract Disputes

Brokers and agents offer a valuable service, and while many love what they do, compensation for their effort is expected. Both sellers and buyers should provide compensation upon sale, but like any business agreement, conflicts can occur.

In Florida, a brokerage firm sued the buyer and seller of a real estate deal to get its deserved commission. 

Real Capital’s argument

Real Capital Partners took both the seller and buyer of a 10-acre, three-building office campus in Miami to court. Real Capital, a brokerage firm, expected a commission on the sale.

ShareMD, a healthcare real estate and medical practice solution company, was the buyer. The sellers are a group of affiliated companies associated with Pan American Companies. Both found themselves named in a suit filed in Miami-Dade Circuit Court. All parties denied any wrongdoing. 

Real Capital was looking for the standard broker commission, which is generally three percent, or around $1.5 million, to split among the brokers. Real Capital attests they introduced buyer and seller, managed information on the finances and rent rolls, and delivered ShareMD’s letter of intent to purchase the property.

At the time, Real Capital agreed to work with Pan American’s intent to sell the property for $36 million, with the agency receiving $300,000. The agency would split the fee with the buyer’s broker.

Procuring cause

Procuring cause” is the term used to identify a party who played a role in the successful sale of a property but did not receive compensation.

Real Capital claims that they asked Pan American if the buying and selling parties were under contract. Pan American denied a contract existed. Real Capital later saw a news report that ShareMD had bought the medical campus. 

According to the accounts, ShareMD closed escrow on a 177,358 square foot, three-building medical office campus sitting on ten acres in Miami, Florida. The seller was listed as private ownership. Ideal Management and FIP Realty Services represented ShareMD.

What the law says

In Florida, a real estate broker who procures cause of a sale has the right to a commission. To win a lawsuit in this matter, the broker must prove an affirmative act that brought seller and buyer together. The broker also needs to stay involved in the negotiations unless the seller or buyer intentionally excludes the broker.

A broker’s pursuit of commission is not bound by a contract. The agreement can be in writing or agreed to orally.