The author is the author of the book “Real Estate Brokerage Laws”
The broker working with the Remax franchisee entered into an exclusivity agreement with a property owner in Herzliya. After publishing the property, one of the buyers of the property (the property was sold to several people) contacted her after she signed an order for brokerage services, and claimed, among other things, that the broker did not act in good faith towards her.
The buyer also claimed that since she finally purchased only part of the property, she should pay only for the part she purchased. The broker did not accept the buyer’s claims and went to court.
The court is therefore required to consider two matters.
1. Does stating different amounts in the two orders indicate a lack of loyalty / dishonesty on the part of the broker? In the agreement between the broker and the sellers, the price for the property was specified: NIS 7 million, while in the order signed by the defendant, the purchaser of the property, it was recorded that the price is NIS 7.35 million. Does this fact show that the broker acted in a conflict of interest and violated the fiduciary duty?
How much did the buyer intend to pay for the property
It turned out that the defendant offered to pay the sellers 7 million shekels even before she signed the order for the brokerage services, without knowing at that stage about the amount the sellers demanded. Hence, the amount recorded in the brokerage services order signed by the defendant: NIS 7.35 million, had no effect on the offer forwarded to the sellers.
The sellers’ attorney sent a first draft of the agreement with the amount of NIS 7.35 million. That is, the amount of the offer of NIS 7 million was not acceptable to the sellers.
From this point, the negotiations moved on regarding the consideration for the parties and their proxies. It turned out that the sellers received additional offers and therefore raised their demand to NIS 7.15 million. It also turned out that the plaintiff, the mediator, made an effort to bring the parties to an agreement on an amount of NIS 7.3 million, while the sellers raised the demand during the negotiations to NIS 7.5 million.
In this matter, it was determined that the broker acted with dedication and fairness towards the buyer of the property, even though the higher the price, she could have received higher brokerage fees.
The court added that naturally in many cases a mediator represents both parties and therefore he is not obliged to inform his client that he is also acting on behalf of the other party. Since the mediation fee on both sides was reasonable and acceptable, the claim of conflict of interest on the part of the mediator was rejected.
How much will the buyer pay for her part in the transaction
2. Brokerage fees only for the part actually purchased or for the full consideration?
The court came to the conclusion that once the buyer of the property signed an order for brokerage services in which it was stated that she undertakes to pay the brokerage fees, the buyer of the property cannot be released from her obligation to pay the full brokerage fees.
The fact that she actually purchased only one-fifth of the rights in the property, while the other purchaser purchased three-fifths of the property and later purchased one-fifth, does not lead to the conclusion that she is liable only according to her final share in the purchase agreement. The buyer did not provide any evidence that it was agreed that she would pay only one-fifth of the consideration.
Tel Aviv (Hirsch) 4065-03-21 Star Land Investments and Enterprises Ltd. N. Lilach Moyal-Alharar