When Does a Real Estate Broker Earn a Commission
In general, “‘to prevail on a cause of action to recover a commission, the broker must establish (1) that it is duly licensed, (2) that it had a contract, express or implied, with the party to be charged with paying the commission, and (3) that it was the procuring cause of the sale.’” Angelic Real Estate, LLC v. Aurora Properties, LLC, 243 A.D.3d 98, 101 (2d Dept. 2025) (quoting Blooming Home Realty, LLC v. Infinity Holdings Northeast, LLC, 228 A.D.3d 815, 816 (2d Dep’t 2024).) However, a broker with an “exclusive right to sell” is entitled to a commission even if the seller “alone were responsible for the sale” because under such circumstances, the broker “need not show that it was the procuring cause of the sale.” Blooming Home, 228 A.D.3d at 816. (citations and internal quotation marks omitted); see also The Rachmani Corp. v. 9 East 96th Street Apartment Corp., 211 A.D.2d 262, 268 (1st Dept. 1995).[1]
Moreover, a broker “is entitled to a commission under a theory of implied brokerage agreement where it shows it procured a ready, willing and able buyer for a transaction that was approaching success but was thwarted or frustrated by a seller who backed out to avoid the payment of the commission and not for a good faith reason such as a fair view of its own interests.” Picken v. RN Realty, 238 A.D.3d 523, 523 (1st Dept. 2025) (citations omitted).
Further, a compensation agreement for licensed real estate brokers does not have to be in writing because such agreements are expressly exempt from the statute of frauds. See NY General Obligations Law § 5-701(a)(10); Elhanani v. Kuzinez, 172 A.D.3d 590, 591 (1st Dept. 2019). “In the absence of an agreement to the contrary, a broker is deemed to have earned its commission when it produces a buyer who is ready, willing and financially able to purchase the property at the terms set by the seller.” Central City Brokerage Corp. v. Elyachar, 40 A.D.3d 452, 453 (1st Dept. 2007) (citations omitted); Rusciano Realty Services. Ltd. v. Griffler, 62 N.Y.2d 696, 697 (1984). An important element in determining whether a broker “will be deemed to have earned” a commission is the “prospective buyer’s financial ability.” Central City, 40 A.D.3d at 453 (citation omitted); Rusciano, 62 N.Y.2d at 697-98. In this regard, “the burden lies with the broker to establish that its prospective purchaser was financially able to meet the purchase price.” Central City, 40 A.D.3d at 453 (citations and internal quotation marks omitted). An affidavit by a potential buyer that he was financially able to close is insufficient where it is not “accompanied by financial statements to substantiate his ability to purchase the property.” Taibi v. American Banknote Co., 135 A.D.2d 810 (2d Dept. 1987) (citation omitted).
However, even if a broker finds a prospective buyer that is ready, willing and able to pay the sum requested by the seller, the broker will not earn a commission if there was not a “meeting of the minds as to other terms customarily contained in an agreement for the sale of real property, such as a contract date, whether the premises were to be sold in “as is” condition and when the closing was to take place.” Norma Realty, Inc. v. Miral, 301 A.D.2d 364, 364 (1st Dept. 2003); see also Kaplon Belo Assoc., Inc. v. D’Angelo, 79 A.D.3d 930, 930 (2d Dept. 2010) (citations and internal quotation marks omitted) (“mere agreement as to price on a proposed sale of real property does not constitute a meeting of the minds of vendor and vendee so as to entitle the real estate broker to commissions [because t]he parties must be brought to agreement with respect to all terms customarily encountered in such a transaction.”) In Devine Real Estate, Inc. v. Brennan, 42 A.D.3d 646 (3d Dept. 2007), the Court held that, although the buyer made an offer at the Seller’s asking price, the seller satisfied its burden of demonstrating that no commission was due because “there was no meeting of the minds on the material terms of the sale since the proposed contracts never acknowledged the DEC issues.” Id. at 647.
Against this backdrop, we discuss Thomas J. McCarthy Real Estate v. Herlin, decided by the Appellate Division, Second Department, on November 4, 2026. In 2022, the broker and seller entered into an exclusive right to sell agreement, which provided that “the [broker] would be entitled to a commission upon producing a buyer who was ready, willing, and able to purchase the subject property.” The broker “engaged with” a purchaser that entered into a sales contract for the property. The closing did not occur on the contract date and, thereafter, the broker sent two letters to the seller demanding a commission.
When payment was not made, the broker commenced an action for its commission. The parties each moved for summary judgment and the seller’s motion was granted and the broker’s was denied. On the broker’s appeal, the Second Department affirmed.
After discussing the law along the lines set forth in this article, the Court stated:
Here, the [broker] failed to establish [its] prima facie entitlement to judgment as a matter of law on the complaint. The evidence submitted by the [broker] failed to demonstrate that, pursuant to the exclusive right to sell agreement, they produced a buyer who was ready, willing, and able to purchase the property (see GLND 1945, LLC v Ballard, 172 AD3d 1330, 1331; MB Shtetl 1 Corp. v Singh, 166 AD3d 604, 605). Since the parties' submissions demonstrated that the purchasers were not ready, willing, and able to purchase the property, the Supreme Court properly granted the defendant's motion for summary judgment dismissing the complaint (see Pinnacle Realty of N.Y., LLC v 255 Butler, LLC, 125 AD3d at 953; Kaplon-Belo Assoc., Inc. v D'Angelo, 79 AD3d 930, 931).
Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.
This article is for informational purposes and is not intended to be and should not be taken as legal advice.
Unless otherwise stated, Freiberger Haber LLP’s articles are based on recently decided published opinions or litigation releases and not on matters handled by the firm.
[1] Angelic Real Estate and the law of brokerage agreements granting “exclusive rights to sell” was discussed in our BLOG article “The Second Department Explains the Difference Between a Brokerage Agreements Granting an “Exclusive Right to Sell” and an “Exclusive Agency”.
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