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Procuring cause when lease leads to sale

Started by sabina13
about 9 years ago
Posts: 0
Member since: Jun 2014
Discussion about
I rented my apartment 3 years ago via a broker. Both the owner and myself paid rental commissions. The broker added procuring cause statement in the lease that in the event of sale to the leasee, the seller will pay 5% commission. 3 years had passed and we had signed 2 new leases without any procuring clause, and with technically different names (as my husband now on the lease with me, not just me as in the original). We had no contact with the broker and want to approach the owner with the offer. Will he still owe 5% commissions in the direct sale? Seem unfair given the time had passed with no contact with broker, no need to market or price the apartment. The equivalent unit is for sale in the building, so the market price is clear. Any advice how to handle this situation?
Response by uptown_joe
about 9 years ago
Posts: 293
Member since: Dec 2011

This seems to me the seller's problem, not yours, no?

From your perspective, the ideal would be for your attorney to throw in an indemnity against broker fees in the sale contract, making it 100% clear that the seller would be responsible if there is a claim.

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Response by fieldschester
about 9 years ago
Posts: 3525
Member since: Jul 2013

I don't know why owners would give this free provision to a broker. The broker is getting a rental fee. Why then give the broker an opportunity for a second fee without having to earn it?

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Response by CCL3
about 9 years ago
Posts: 430
Member since: Jul 2014

It is the seller's problem technically, but if the seller is not paying a fee the buyer can come in with a lower offer.

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Response by CCL3
about 9 years ago
Posts: 430
Member since: Jul 2014

As for the lease issue I would say later leases with no procurement clause override original lease, but I'd need to see the original language to be sure.

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Response by dmargolies
about 9 years ago
Posts: 9
Member since: Jan 2010

it may not be the lease that is relevant, rather the listing agreement that the landlord signed with his/her agent. Ask them if they still have a copy and what it states, usually there is a clause which indicates that if the tenant buys the apt at a later date a commission is owed. This happened recently with a broker from my office they rented a townhouse to a renter four years ago, that renter then bought from the owners, and he was paid commission by the owners.

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Response by 30yrs_RE_20_in_REO
about 9 years ago
Posts: 9880
Member since: Mar 2009

Find another broker who will do the transaction for a nominal amount - seems like that would be proof of who the procuring broker was.

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