Legal Memorandum: Unlicensed Broker's Commission

Issue: Whether a broker who was not a licensed real estate broker on the date a deal closed is entitled to commission on the sale of property in North Dakota.

Area of Law: Real Estate Law
Keywords: Real estate broker; Entitlement to commission; License
Jurisdiction: California, Minnesota, New Jersey, New York, North Dakota
Cited Cases: 243 N.Y. 51; 685 N.W.2d 320; 243 A.D.2d 681; 274 N.W.2d 175; 652 N.Y.S.2d 919; 585 N.Y.S.2d 245; 251 N.Y. 305; 453 N.W.2d 602; 335 P.2d 769; 369 N.W.2d 321; 996 P.2d 151; 696 A.2d 85; 38 N.Y.S.2d 935
Cited Statutes: New York Real Property Law § 442-d; 12 Am. Jur. 2d Brokers § 245 (2011); N.D. Century Code § 43-23-08(1) (2011); N.D. Century Code § 43-23-08.1; Minn. Stat. § 82.33, subd. 1 (1998)
Date: 02/01/2012

No North Dakota cases appear to have addressed this precise scenario, cases from other states with similar statutory licensing schemes have done so, holding that the relevant period of time for purposes of determining entitlement to commission is when the broker brought together the minds of the buyer and seller—not when the closing occurred. 

In Bersani v. Basset, 585 N.Y.S.2d 245 (App. Div. 1992), for instance, the defendants asserted that New York Real Property Law § 442-d barred the plaintiff’s cause of action for recovery of a broker’s commission, because the plaintiff was not a licensed broker on the date of the closing of the transaction at issue.  New York Real Property Law § 442-d provides, in relevant part, that

no person . . . shall bring or maintain an action . . . for recovery of compensation for services rendered . . . without alleging and proving that such person was a duly licensed real estate broker . . . on the date when the alleged cause of action arose.


Id. at 246 (quoting N.Y. Real Property Law § 442-d).  Under the defendants’ theory in Bersani, the plaintiff’s cause of action "arose" in April 1989, at the time of the closing, but the court disagreed:

Generally, a broker is entitled to a commission if he was licensed at the time the services were rendered, not at the time of the closing. The broker’s cause of action is predicated upon the rendering of specific services, namely, bringing together the minds […]


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