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The broker's advocate: Jay J. Gurfein talks law.

Recently, Real Estate Weekly spoke with attorney Jay Gurfein about real estate brokerage law, a subject with which this eminent real estate attorney is intimately familiar, having worked in the field for the last for 40 years. Below, Jay discusses his past, his firm and the intracacies of law.

REW: What makes your law firm different from other firms?

JJG: To the best of my knowledge we are the only law firm in the metropolitan area that emphasizes real estate brokerage litigation: that is a broker suing to collect a brokerage commission. In addition, we are unique, in that we handle most of these cases on a contingency basis.

REW: How would you describe the type of cases you generally handle?

JJG: We represent real estate brokers who have been deprived of their commission. Generally a real estate broker has no right to stop a sale, even if the seller deliberately breaches the brokerage agreement. Under those circumstances the broker should permit the sale to proceed and then sue for the commission. In certain cases where there is a written brokerage agreement and a written commercial lease in excess of three years, the unpaid broker has the right to file a brokerage lien against the property for the amount of the commission.

REW: What is the customary basis on which a broker can sue in New York State to recover real estate brokerage commissions?

JJG: If a broker can prove in court that he or she was the "procuring cause" for a sale, or lease of real estate he will be entitled to a brokerage commission based on a percentage of the purchase price on a sale or based on a percentage of the rents in the event of a lease.

REW: What are the difficulties in proving that the broker was the procuring cause?

JJG: Difficulties exist because there is no statutory definition for "procuring cause". Neither the statutes in New York state nor a statute in any other state is there a definition for procuring cause. And yet, it probably is the most important term defining the area of real estate brokerage law.

REW: If real estate brokerage law is not found in the New York statute how can a broker learn about brokerage law?

JJG: The vast majority of the law is based on legal precedent. Precedent is established when a judge makes a ruling or decision on a particular issue, in a particular case. I would like to quote from one case that demonstrates in rather simple terms the precedent required where a broker is deemed by the judge to be the procuring cause for a sale or lease; The judge stated: "It is well settled that in order to state a direct claim for a commission, a broker must prove (1) that he or she is duly licensed, (2) that he or she had a contract, express or implied, with the party to be charged with paying the commission, and (3) that he or she was the 'procuring cause' of the sale. In order to qualify for a commission, a broker need not necessarily have been involved in the ensuing negotiations or in the completion of the sale. However, 'if the broker does not participate in any of the negotiations, he must at least show that he created an amicable atmosphere in which negotiations proceeded or that he generated a chain of circumstances that proximately led to the sale'". It may be an oversimplification but the broker then has the job of proving that the facts of the case fall within the underlined definition of "procuring cause" above.

REW: What is the best advice you could give a broker prior to making a deal?

JJG: A broker may not be able to prevent litigation with a client who intends to cut his commission. What he can do, however, is plan his strategy so that if he does get involved in litigation, he might place himself in a better position to win. It is important for a broker to keep a very good paper trail. Knowing the principles of law that are involved in the case will help the broker strategize his position.

REW: You made a career change somewhat later in life. What was that like?

JJG: I got out of law school very late. I started law school when I was 30. People generally start law school when they're 22, but I had worked for a real estate operator in New York City, I was an accountant and really didn't know that much about law--and certainly hardly anything about real estate law--but I was a smart kid. Soon, I was handling closings for my boss. About that time, I remember someone saying to me, "You know, you could have a nice practice." I told him, "The only problem is, I'm not a lawyer." He was shocked: "You're not a lawyer?" I said, "No, I just go around helping my boss do deals." This guy then said I was crazy, that I could go to New York Law School and if I enrolled in the evening school (this was important because I had a day job plus a family) I could make it in a little over two years. I went home and asked myself, "Where would I be in my career if I don't do this?" I realized that I would have been no further along. The rest is history. They accepted me at New York Law School; and two years later I graduated No. 1 in my class. I was the ol' timer then, though I was 30 years old. Most of the other kids were 22.

Shortly after I was admitted, I worked on a case involving a real estate broker suing for commission. That single case allowed me to refer to myself as an "experienced real estate brokerage litigator." Today, virtually our entire practice involves the litigation of real estate brokerage matters.
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Title Annotation:INSIDER'S OUTLOOK
Publication:Real Estate Weekly
Date:Aug 9, 2006
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