- A duly licensed real estate broker earns a commission when he or she produces a person who was ready, able and willing to purchase or lease all or any part of a parcel of real property or any interest in a cooperative apartment pursuant to a written or oral contract of brokerage employment.
- Failure to pay a commission gives rise to a cause of action for breach of contract
- Breach of contract is not an action that seeks a judgment which would affect the title to, or possession, use or enjoyment of, real property as required as a basis for filing a notice of pendency pursuant to CPLR 6501
- Wrongfully filing a Notice of Pendency is a tort whether it be called slander of title; tortious interference with the right of contract; or abuse of process - so don't do it!!!
- No lien can generally attach pursuant to a breach of contract for a real estate commission, except in certain situations as defined under the lien law (this does not include a standard residential real estate transaction)
§ 294-b. Recording brokers affidavit of entitlement to commission for completed brokerage services
1. A duly licensed real estate broker who asserts that he or she has produced a person who was ready, able and willing to purchase or lease all or any part of a parcel of real property or any interest in a cooperative apartment pursuant to a written or oral contract of brokerage employment between the owner of said parcel of real property or interest in a cooperative apartment and such broker, and who asserts that such person or a party acting on his or her behalf subsequently contracted to purchase or lease, or did purchase or lease such real property or any part thereof, or any interest in a cooperative apartment and who asserts that he or she is entitled to a commission pursuant to such written or oral contract, may file an affidavit of entitlement to commission for completed brokerage services in the office of the recording officer of any county in which any of the real property is situated.
2. Such affidavit shall include: (i) the name and license number of the broker claiming the commission; (ii) the name of the seller or person responsible for commission; (iii) the name of the person authorizing the sale on behalf of the seller, if any, and the date of such authorization; (iv) a copy of the written agreement, if any; (v) a description of the real property or interest in the cooperative apartment involved; (vi) the amount of commission claimed; (vii) a description of the brokerage services performed; and (viii) the dates thereof. Recording such affidavit shall not invalidate any transfer of real property or lease thereof. Such affidavit shall not be deemed to create a lien and shall be discharged one year after filing.
3. Upon receipt by the county clerk of a broker's affidavit of entitlement to commission for completed brokerage services for the purpose of recording, entering and indexing, the clerk shall record such affidavit in the lien docket and shall note thereon that such notice does not constitute a lien nor shall it invalidate any transfer or lease. In payment for said services the county clerk shall be entitled to receive a fee equivalent to that received for recording a deed and pages thereof.
4.
(a) Within five business days after filing the affidavit of entitlement, the broker shall serve a copy of such affidavit, along with the fee required pursuant to paragraph (c) of subdivision five of this section, upon the seller by registered or certified mail, return receipt requested or by personal delivery, to the address set forth in the written contract of brokerage employment. If the delivery of the deed or delivery of the stock certificate and/or proprietary lease will occur in five business days or less from the filing of the affidavit of entitlement, then the broker shall personally deliver a copy of the affidavit of entitlement to the seller. Where there is more than one seller, service upon one seller shall be deemed sufficient to meet the requirements of this paragraph. Failure to serve the affidavit of entitlement upon the seller pursuant to this paragraph shall cause a forfeiture of the broker's rights under subdivision five of this section. In the event the seller fails to deposit any monies pursuant to paragraph (a) of subdivision five of this section, the seller shall immediately return the fee provided by the broker.
(b) If the seller is represented by an attorney and has provided the attorney's contact information to the broker prior to the filing of the affidavit of entitlement, the broker shall provide a copy of the affidavit of entitlement to the seller's attorney via mail, facsimile, e-mail, personal delivery or any other agreed upon method within five business days of the filing of the affidavit of entitlement. Failure to deliver a copy of the affidavit of entitlement to the seller's attorney pursuant to this paragraph shall not cause a forfeiture of the brokers rights under subdivision five of this section.
5.
(a) Whenever an affidavit of entitlement by a duly licensed real estate broker, which includes a written contract of brokerage employment containing the notices set forth in paragraph (j) of this subdivision, has been recorded pursuant to this section prior to the delivery of a deed in connection with a sale of all or any part of a parcel of real property, or delivery of the stock certificate and/or proprietary lease in connection with the sale of a cooperative apartment, and the broker does not receive the compensation called for under the terms of such written contract at or prior to the delivery of the deed or delivery of the stock certificate and/or proprietary lease, the lesser of the net proceeds of the sale or the amount of the unpaid portion of the compensation agreed to in such written contract shall be deposited by the seller, at the time of delivery of the deed or delivery of the stock certificate and/or proprietary lease, with the recording officer in whose office such affidavit of entitlement had been recorded.
(b) In the event multiple affidavits of entitlement are filed in connection with a sale of real property or any interest in a cooperative apartment pursuant to this section, the seller shall be obligated to deposit an amount equal to the lesser of the net proceeds of the sale or the greatest amount of the unpaid portion of the compensation agreed to in the written contracts of brokerage employment attached to the multiple affidavits of entitlement.
(c) Upon deposit of any monies pursuant to paragraph (a) of this subdivision, the recording officers shall be entitled to receive a fee of twenty-five dollars, which shall be paid by the real estate broker. The real estate broker shall make the twenty-five dollar fee payable to the recording officer in such form of payment that is accepted by the recording officer.
(d) The monies deposited with the recording officer pursuant to this subdivision shall be held pursuant to subdivision (b) of section twenty-six hundred one of the civil practice law and rules until the rights of the seller and broker to such monies have been determined by order of a court of competent jurisdiction as provided in this paragraph. All deposits of money pursuant to this subdivision shall be deemed paid into court and shall be subject to the provisions of article twenty-six of the civil practice law and rules, except as otherwise provided in this subdivision. An order for the payment of such monies to the broker or seller may be made in any action or proceeding determining or declaring the entitlement, if any, of the broker to compensation under the written contract of brokerage employment recorded with the affidavit of entitlement or as otherwise provided in rule twenty-six hundred six of the civil practice law and rules or, whether or not an action or proceeding has been commenced, may be based upon a stipulation signed by the seller and the broker. Any application for an order pursuant to this paragraph made by the broker or the seller shall be on motion with notice to the other party, except that an application based upon a stipulation signed by the seller and the broker may be submitted without notice if the stipulation so provides.
(e) If neither the broker nor the seller commences an action or proceeding described in paragraph (d) of this subdivision within sixty days from the day of deposit of monies pursuant to paragraph (a) of this subdivision, which time limit shall not be extended, the seller, upon petition, shall be entitled to an order directing the payment to the seller of such monies out of court, including any accrued interest thereon, less any fees to which any public officer may be entitled pursuant to law, but such an order shall not be deemed to determine the broker's claim for a commission.
(f) Notwithstanding any other provision of law to the contrary, upon the seller making the deposit required by paragraph (a) of this subdivision, any action or proceeding based upon the contractual obligation to pay a commission under the contract of brokerage of employment shall be commenced by the broker within six months of the deposit of the monies pursuant to paragraph (a) of this subdivision.
(g) The obligation to deposit monies pursuant to this subdivision or the seller's failure to do so shall not constitute or be deemed to create a lien or encumbrance against any real property. Any violation of this subdivision shall not invalidate any transfer of real property.
(h) In any action or proceeding commenced pursuant to this subdivision when the seller has not made the deposit required by this subdivision, and it is determined by a court that the broker is entitled to compensation pursuant to the written contract of brokerage employment, the broker shall be awarded costs, including the fee paid pursuant to paragraph (c) of this subdivision, and reasonable attorneys' fees.
(i) Nothing in this subdivision shall be construed to prohibit a broker from waiving a seller's obligation to deposit money under this subdivision, provided such waiver is set forth in an instrument signed by or on behalf of the broker. Such instrument may be a written contract of brokerage employment or any other instrument.
(j) The provisions of this subdivision shall only apply when the written contract of brokerage employment contains the following statement to the seller in clear and conspicuous bold face type:
"At the time of closing, you may be required to deposit the broker's commission with the county clerk in the event that you do not pay the broker his or her commission as set forth herein. Your obligation to deposit the broker's commission with the county clerk may be waived by the broker."
(k) The provisions of this subdivision shall only apply to real property improved by a one to four family dwelling and to individual condominium units and individual cooperative apartments where the one to four family dwelling, condominium unit or cooperative apartment is used or occupied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more persons.
