Massey Knakal Realty of Brooklyn, LLC v. Neivens Realty Corp., New York County Supreme Court Index No. 651746/2011.
Can a real estate brokerage firm collect a sales commission if the broker is unlicensed? Justice Elieen Bransten of the New York County Commercial Part held that it could. In this case Massey Knakal, a New York City real estate broker, sued to recover an unpaid brokerage commission. The defendants contended, in an affirmative defense, that Massey Knakal could not recover a commission because at the time one of its Managing Directors executed the listing agreement, he was not a licensed New York State real estate broker or sales person. (The Managing Director’s license had expired and he had not renewed it.)
Massey Knakal moved to dismiss the defendants’ affirmative defense. Although the defendants argued that the Managing Director lacked authority to act as a real estate broker or salesperson without a current, valid license under New York Real Property Law § 442, the Court was not persuaded. It held that the Managing Director was acting within the scope of the authority that Massey Knakal intended to confer upon him. The Court further reasoned that the Managing Director had sufficient apparent authority so as to bind Massey Knakal, even if he lacked actual authority. Thus, the Court concluded that merely because the listing agreement was signed by a person lacking a current broker’s license the seller remained obligated to pay Massey Knakal a commission.
The lesson of Massey Knakal v. Neivens Realty Corp. is that owners that engage brokerages cannot avoid their obligations under a written listing agreement on the basis of the faulty licensing status of the brokerage’s signatory.