Realtor Fee for an Altered Purchase
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Living The Halachic Process
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Part 3
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Rabbi Daniel Mann
The defendants were interested in buying two apartments in Israel. They signed an agent’s service contract with the plaintiff, a real estate agent, obligating them to pay the plaintiff 2% of the sales price if they were to buy an apartment that she showed them. The plaintiff told the defendants that she regularly gives a discount for buying two apartments, whereby they pay only 1.5% commission for the second apartment. At a certain point, the defendants were interested in principle in buying two apartments that the plaintiff had shown them, but they told her that they would not do so if they would have to pay the full 2% commission. After negotiations, during which the defendants calculated how much the plaintiff stood to gain from the commissions even after a reduction, the plaintiff agreed to lower her agent’s fee to 1.4% for each of the apartments, and she faxed them two invoices stating the respective fees for the two imminent purchases. Subsequently, an engineer uncovered serious flaws in the more expensive apartment, and the defendants bought only the cheaper apartment. The plaintiff then sent the defendants a bill based on a 2% rate of commission, claiming she had agreed to the special reduction only because of the prospect of a double purchase. The defendants, however, paid only the 1.4% rate, which appeared in the invoice faxed earlier. Do the defendants have to pay the remaining 0.6%?
It is clear from the litigants’ presentations that the expectation that the defendants would buy both apartments played a decisive role in their demand and in the plaintiff’s acquiescence to reduce the commission rate to 1.4%. This seems to justify the plaintiff’s claim. However, it is also clear that the defendants had succeeded in lowering the plaintiff’s fee from her standard price and increasing her standard reduction for a second apartment. Although the defendants had signed a contract that set the commission at 2%, the plaintiff had apparently viewed their threat not to buy the apartments unless the commission would be lowered as credible. Therefore, had the sides discussed at the time of their agreement what they would do if the defendants ended up purchasing only one apartment, it is obvious that they would have arrived at a figure somewhere between 1.4% and 2%. Thus, justice was served by their eventual compromise, in which they approximated the agreement that they would have reached had they had the foresight.
Regarding din (formal judgment), as opposed to compromise, it is not possible to simply guess at a reasonable rate in this case. Rather, a decision in this case with initial agreements but unclear conclusions must be based on halachic rules. At first glance, the plaintiff appears to be the muchzeket (have the benefit of the status quo), as the defendants signed a binding agreement that sets the rate at 2%, an agreement that was never formally cancelled. The invoice that later set the rate for the apartment that was purchased at 1.4% is invalid because it was clearly based on the mistaken assumption that the defendants would buy two apartments. Thus, ostensibly, we should revert to the rate of 2%.
Upon further review, however, we note that the contract did not create a chazaka (status quo) because there never was an obligation of 2%. More precisely, the contract represented a potential obligation of what the commission would have been had the defendants bought the apartment without receiving a reduction. However, since they refused to buy any apartments until they received an oral agreement to cancel the 2% commission and since no commission beyond 1.4% was set, the burden of proof is on the plaintiff if she wants to extract more than that. Thus, the plaintiff was working for no less than 1.4%, but regarding the possibility of receiving more, she was like one who worked without an agreement that set the rate of pay. Accordingly, she deserves remuneration in excess of the 1.4% commission only if the lower market range for real estate agent commissions on an apartment of this type exceeds that.[1]