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Seinfeld Loses Broker Commission Case

Published by Joseph Ferrara January 17th, 2007 in New York City and Seinfeld.

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New York Supreme Court Justice Rolando T. Acosta ordered comedian Jerry Seinfeld to pay a brokerage commission to Tamara Cohen. Fusilli Jerry was sued by broker Cohen when he refused to pay her a commission in the purchase of his $3.95 million Manhattan townhouse in 2005. There was no written brokerage agreement but Cohen had showed the house to Jerry’s estate manager and Ms. Seinfeld. When Jerry called to make an appointment to see the house, Cohen did not immediately return the call due to her observance of the Sabbath. The Seinfelds went to see the house themselves and made an offer to buy it.
“The evidence clearly indicated that Cohen served as the Seinfelds’ real estate broker”, said the Judge. The co-broke commission due to Cohen is at least $98,000. Seinfeld’s attorney will appeal, claiming Cohen is unlicensed and an oral agreement for a commission is only legally binding on licensed real estate brokers. Cohen’s lawyer said she was indeed licensed. One lawyer is apparently silly.

Source: Law.com.

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  • There seems to be a lot of discussion on Agency and Procuring Cause on blogs lately and this just adds fuel to the fire.

    There are probably valid points on each side, but the New York courts have shed some legal light on the subject (at least in New York and until the next law suit).

    Regardless of what you may think of the verdict, the lesson to be learned is:

    - let you clients know before you disappear for whatever the reason
    - change your voicemail message letting people know why you aren't available and who they can contact in your absence
    - get someone you respect and trust to assist your clients while you are away so that they feel they you left them out to dry

    We all have obligations and vacations, but you have to cover yourself and your clients while you're personally not available. If you do that, you will never run across this predicament.
  • I think it's tragic that somebody who is as obviously wealthy as Jerry Seinfield would attempt to stiff a Real Estate Broker on commission. What's $98,000 to this guy? Nickels and dimes.

    What is it with that?

    Also, perhaps I don't understand. If the condo was listed with another agent, doesn't the seller normally pay the commission for the buyers agent? Maybe it's different in New York.
  • Yes, Jonathan, the full commission was paid to the listing agent at closing. There was an agreed co-broke with the listing agent and Cohen's share is 98K, payable out of that total commission (two checks are usually cut--one for the listing broker and one for the co-broker). In NY there are no real buyer's brokers (ie where broker is agent of the buyer), all brokers are sub-agents of the seller.
  • SEINFELD
    S crew the agent
    E ven if i am wealthy
    I can use the money
    F or my own good purposes
    E xpect me to do it again
    L awyers or no lawyers
    D irty Jerry is my name.

    Lar
  • What I am assuming is that neither the Listing agent nor the selling agent got paid. 5% or 6% would be total commission and Cohen would only get pais what the co-broke agreed upon. ??
  • Good one Lar!!!
  • I'd like to be creative, but Lar said it all!
    It's a shame how we (the colloquial "we") make it a sport to screw others. Sad :-( md
  • What a whiner...

    I knew there was a reason I didn't watch that show very often. Too much complaining going on all the time.

    Now it's "but I don't wanna pay the agent..."

    Give me a break.
  • I love when the courts set a precident in favor of the broker. So often they take the consumer's side, who obviously went around the broker to buy the house. What's the problem with waiting one whole day?
  • Agreed with Jonathan? Why should Seinfeld as the buyer PAY anything at closing to any broker? Use of a buyer broker is free to the buyer as the buyer gets paid from the split of the seller's brokerage commission, as agreed in the exclusive listing contract and promoted in central brokerage listings systems.

    In short, every buyer broker knows before hand what their cut will be if a deal is brought to the table.

    This is very confusing to me.
  • True Noah. Cohen had a co-broke agreement with the listing broker. Cohen actually sued Seinfeld and the listing broker. The legal question was whether Cohen was entitled to the co-broke as being Seinfeld's agent. As is typical in NYC closings, 2 checks are cut--one for the listing broker and one for the co-broker. I guess Jerry cut only the one check to the listing broker.
  • Actually - Jerry would not have cut the checks himself. Most likely the attorney cut the check from escrow. I have never taken a check from the buyer.

    But - here is where I am stumped. The article did not say if the listing agent got paid - so if in fact she got paid - but not the selling agent - THEN the listing Broker should be in hot water!
  • christine - you are correct! of course, the attorney would cut the checks from escrow. since seinfeld was the buyer, he owed no fee to the agent who helped him - unless they had a specific buyer brokerage agreement - which, apparently they did not [also, never seen a buyer pay a brokerage fee to an agent working "with" a buyer in new york - sub agency = client seller has an agreement with the exclusive listing agent, who is working "for" the seller in a fiduciary capacity, for x amount of commission and that exclusive agreement determines co-brokerage fees to be paid to sub agents. it's very common in new york that buyer agents, who represent buyers in a fiduciary capacity [are there any?], receive -zero - from the seller. an agreement between the listing broker and selling broker would also determine compensation.
  • A seller can, and many times does, instruct the buyer to cut the checks for payments seller has to make, eg. mortgage pay-off, brokers, transfer taxes, with the balance paid to seller.

    So it is possible Jerry was asked to cut the 2 brokers checks, one to Cohen and one to the listing broker and he just cut the listing broker check and included what would have gone to Cohen in the proceeds due the seller.

    We'll have to track down exactly who paid what to whom.
  • Christine, yes the attorney usually will pay the brokers out of escrowed funds (2 checks) but may not have in this case because of issues over the entitlement. It is possible the seller's attorney didn't want to be drawn into the suit by writing the Cohen check and asking buyer to do it (as part of proceeds due seller)& buyer didn't, instead giving it all to seller. I don't know.

    Sellers' attorneys prefer to cut the full check to the listing broker & let them cut a co-broke check but this is rarely done. If there is a co-broke I name both brokers in the contract so that at closing I can write 2 checks. I also ask for 2 bills, one from each broker (this is also routine.
  • Here's a clue. Supposedly the contract called for Seinfled to cut the Cohen check (for the co-broke 1/2 and Seller to cut the listing broker check for the other 1/2).
    http://www.realestateheadlines.net/2007/01/jerr...
  • Irene Astwood
    I am a Realtor in California. I am so glad the end result that the hardworking agent get paid. This is telling the buyer consumer to honor the loyalty to his/her agent. There are so many cases that the poor agents show buyers houses and the buyers end up with the listing agents to close the transaction. Generally, the buyers refuse to sign the buyer representation contract. The unethical listing agent usually don't ask the buyer whether he/she has an agent. Agents, we are all in the business together, be ethical and share the cake.
  • Irene,
    In NYC, buyers rarely sign an agreement with a broker when looking to purchase. On rentals, many a buyer have used brokers to find apartments which they say they dont want (or they use a decoy to be shown the apartment). Later they return to re-negotiate, cutting out the broker fee. This is a common tactic in rentals and the experienced firms will require a prospective renter to sign a contract and authorize a credit check. And still some renters will try to avoid paying the fee. Most people, however, are honest IMO.
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