Yesterday, I was doing something that had nothing to do with real estate - so I thought. For some inexplicable reason, I turned on The People's Court. My parents and I used to love it with Judge Wapner; Judge Marilyn actually annoys me, and I miss Rusty the Bailiff. And why do these women judges use their first names? Judge Marilyn or Judge Judy sounds like preschool names, while Judge Wapner sounds dignified and commands respect. But I digress.
Interestingly enough, the plaintiff for yesterday's case was none other than a broker from a New York City real estate agency, suing a client for not paying commission.
Naturally, I was interested. Even though this is Hawley - Lake Wallenpaupack in the Poconos, and not the "big city," I have come across a few people who certainly want a real estate agent, until it's time to actually pay them. Ahhem. Sorry. Save that soapbox for a different day...
ANYWAY....it turned out the broker had an exclusive-right-to-rent listing agreement with the client he was suing. The client had a Cape Cod home with a finished basement. He wanted to rent the main house to a tenant, while he lived in the basement.
Anyway, the agency did bring a willing tenant...but who could not pay the agreed upon price...d'oh. After this, the agency did not bring any other prospective tenants by. The client grew impatient and found his own tenant. Since he found his own tenant, he did not want to pay commission.
My first thought was "You signed an EXCLUSIVE RIGHT TO RENT!" (More on "Exclusive Right To" contracts in the future...)
So, initially, I began to root for the broker. Initially...
The broker looked so polished. I could see his REALTOR lapel pin catching the studio lights (I noticed this simply because I'm an agent, with my own REALTOR pin stashed somewhere in my house; your average Joe probably wouldn't have recognized the pin...) He looked very cool, professional, confident, and in charge; ready to walk away with his commission...but he wanted $4400.
Huh? The rent was $2200. I'm assuming that the fee was 1 month's rent. So where did he get this other $2200 from?
"It's a two unit building," the broker states.
After much hemming and hawing, it turns out that the client did not contract with them for two units. Only one. The contract, according to what was presented, clearly excluded the basement. Thus, the real estate agency was contracted to rent one unit...the main part of the house. Not the basement.
Then, it turns out that client decided to live in the vacant upstairs part of the house - while he "temporarily" rented his basement for a short term. There was nothing in the contract stating that he as the owner could not LIVE in the upstairs unit while the broker found a tenant. What he did with the basement was his own business...d'oh.So, I started out thinking the client didn't understand the way an exclusive right to rent contract works. Turns out, it was the broker who didn't understand his own contract.
The broker didn't know that the contract was only for one unit. He didn't know that the owner was living in the upstairs unit, not a tenant that the landlord found. He also didn't realize that the landlord was actually still under contract with him, waiting for him to find him a tenant; he was not in breach of contract! He was still waiting for the agency to bring him a tenant! He had NO CASE! D'OH!
Rather than actually use his noggin', (and read the contract!) the broker took his client to court and made a complete dolt of himself on national TV. Not only that, but he has now managed to alienate not only this client, but everyone in the guy's peer group (SOI). And any local people watching Judge Marilyn make mincemeat of him.
One has to wonder if this case was picked to be an episode specifically to make idiots of real estate agents.
But, it never would have happened if the agent & broker had taken some time to chill, and...maybe...re-read the contract, and perhaps...investigate more thoroughly before taking someone to court.
A real estate agent should be able to depend on his or her broker to sort things out when they get out of whack. I have asked my broker to look things over for me - because let's face it...we all have our moments when we need a different pair of eyes to look at a situation and offer a fresh perspective. Sometimes, a situation requires a third party to step in and smooth over any hiccups that may surface.
Litigation should be reserved solely as an ultimate last resort, after all other options are exhausted. When communication with a client doesn't work, then call in your broker - you need one you can trust to be objective and not be a hot-head.
VERY Important Disclaimer: I realize that this episode could very well have been skewed in such a way as to make the broker look like a moron when he was actually in the right and truly deserves $4400 commission. Maybe the "temporary tenants" his client found were actually "permanents" who did initially move in upstairs, and this landlord consulted a savvy lawyer who advised him on how to win this case. (boot the tenants, move upstairs, and claim the tenants lived in the basement...) Still doesn't explain the fact that the broker clearly thought he was entitled to rent for two units when the contract was only for one... Not having seen the contract, and judging solely by the evidence shown on TV, I don't know for sure. This blog was written on the story as it was presented on TV.