Claim for Finder's Fee Rejected by Apellate Court
Claim for Finder’s Fee Rejected
A New York appellate court has considered whether an unlicensed individual could collect a finder’s fee for assisting another individual in finding a commercial property.
Sam Futersak (“Finder”) sought to purchase a commercial property. However, the Finder lacked the funds to purchase the property and so he contacted Sheldon Perl (“Perl”). The parties entered into an agreement where the Finder would locate a property for Perl to purchase in exchange for 15% of Perl’s profit (“Fee”) when he resold the property. The Finder did not have a real estate license.
The Finder located a suitable property and Perl, through a limited liability company, purchased the property for $3,600,000. Perl resold the property ten days later for $4,700,000. Perl refused to pay the Fee.
The Finder filed a lawsuit, seeking payment of the Fee. Perl argued that the Finder could not collect a fee because a real estate license was required when assisting others with the buying and selling of real estate. The trial court ruled that the state’s license law did not apply to the Finder’s services. Perl appealed this ruling.
The New York Supreme Court, Appellate Division, reversed the trial court. Looking at the New York real estate license law, the court found that no one could bring a lawsuit seeking a payment “for services rendered…in the buying, selling, exchanging, leasing, renting or negotiating loan upon any real estate without [being]…a duly licensed real estate broker or real estate salesman on the date the cause of action arose.”
The court ruled that the state’s license law barred the Finder from bringing a lawsuit to collect the Fee, and therefore the court reversed the trial court. The court stated that a license was required for the Finder’s services, even if these services were characterized as those of a “finder”. The court sent the case back to the trial court to enter judgment in favor of Perl.
Futersak v. Perl, 923 N.Y.S. 2d 728 (N.Y. App. Div. 2011).
Editor’s Note: The New York State Association of REALTORS® submitted an amicus curiae brief, arguing that the Finder was required to have a license in order to receive a fee. NAR Legal Affairs would like to thank Anthony Gatto of NYSAR for alerting us to this decision.