No license? No commission – N.Y. Real Property Law § 442-d

No one may bring or maintain an action in a New York court for compensation for services rendered in buying or selling real estate without alleging and proving that they were a duly licensed broker or salesperson on the date the alleged cause of action arose. The burden sits on the person claiming the fee, and the date that counts is when the cause of action arose - not when the introduction was made.

They agree a fixed thank-you payment unconnected to the sale price, described between them as a gift rather than a commission, and both treat the matter as closed.

The requirement is to have been duly licensed on the date the alleged cause of action arose, so a gap at the wrong moment matters even where the work was done properly throughout. What the section does not decide is when the commission was earned - whether a ready, willing and able buyer was produced, and on what terms, is a question of contract.

They agree a reduced figure reflecting the work actually done, paid promptly, and the brokerage puts a renewal reminder in place so the point cannot arise again.

The list of activities is broad and covers renting and leasing as well as sales, so a letting introduction is within the section. It also sits alongside General Obligations Law § 5-701(a)(10), which requires a writing for a contract to pay compensation for negotiating a real estate transaction and expressly excepts duly licensed brokers and salespersons - so an unlicensed finder meets both requirements at once.

The landlord pays for the hours actually spent showing the space, and both accept that any future introduction arrangement is agreed in writing with a licensed broker before anyone is shown around.

Whether a plaintiff who rendered services as a finder/broker without a license can recover compensation despite the existence of a promissory note and letter agreement.

The court held that the existence of a promissory note and letter agreement does not render the action proper if the plaintiff lacked a broker's license when the services were rendered.

That defendant signed a promissory note and a letter agreement (setting forth essentially the same promise as in the promissory note) would not render plaintiffs action proper (see Levinson v Genesse Assoc., 172 AD2d 400 [1st Dept 1991]; Sorice v Du Bois, 25 AD2d 521 [1st Dept 1966]; Futersak v Perl, 84 AD3d 1309 [2d Dept 2011], lv denied 18 NY3d 943 [2012]).

Whether an unlicensed limited liability company can recover a commission or fee for real estate brokerage services when its sole managing member is a licensed real estate broker.

An unlicensed limited liability company is barred from receiving a commission or fee for services in the nature of brokerage services, even if its sole managing member is a licensed real estate broker.

Although Bode was a licensed real estate broker, Gnosis, an unlicensed LLC, was nonetheless barred from receiving a commission or fee for services in the nature of brokerage services (see Real Property Law § 442-d; Sharon Ava & Co. v Olympic Tower Assoc., 259 AD2d 315, 316 [1999]; Philip Mehler Realty v Kayser, 176 AD2d 104 [1991]).

Whether a real estate broker has standing to bring an action to recover a commission earned by his licensed salesperson under a fee agreement?

A real estate broker has standing to bring an action on behalf of his salesperson to recover a commission, because a salesperson cannot sue a third party directly; only the broker may initiate such an action.

Instead, an action to recover such commission may only be initiated, on the salesperson’s behalf, by the broker associated with the salesperson (see Wong v Loh, 162 AD2d 683, 684 [1990]).