How current events impact business & real estate

Tuesday, September 25, 2012

Brokerage Fee Disputes DON'T Belong in the Commercial Division

In New York State Courts there are distinct Judges that sit to hear commercial cases. These Judges seek to better serve the needs of the business community and our State's economy. To accomplish this goal, there are distinct rules (202.70) in place to provide for earlier assignment of cases and uniform and more thorough procedures for expert discovery. To learn more about the purpose of the commercial division, read the Chief Judge's Task Force report by clicking here

Yet, Real Estate Agents are Professionals, not business people. They are licensed by the Department of State and have certain ethical requirements to maintain their status as a professional. These professionals consist of Brokers and Salespersons. As a result, when these professionals aren't paid and they bring suit to collect their professional fees, they should not sue in the commercial division. 

Here is why. Rule 202.70(c) of the Uniform Civil Rules for the Supreme Court & the County Court states that "Non-commercial cases The following will not be heard int he Commercial Division even if the monetary threshold is met: "(1) Suits to collect professional fees". Therefore, real estate brokerage fee disputes are relegated to a non-commercial part where the litigation is typically over a longer duration, without as precise rules and the parties are not pushed as eagerly to settlement. It seems being a professional is distinct from being a business person and our job as professionals is to uphold the nobility of the profession beyond merely making a profit. The Court System's Rules echo this fact and we should take these rules into our assessments of collectibility of our fees when clients refuse to pay. 

Being a professional changes things. 

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