Read full decision: P. Zaccaro Co. v. DHA Capital, LLC

New York appellate court affirms lower court ruling that brokerage acted as an undisclosed dual agent and therefore could not seek a commission from the transaction.

A real estate brokerage (“Firm”) brought a lawsuit against a property owner (“Seller”) seeking to collect an unpaid commission from a transaction. The Seller moved to dismiss the lawsuit, arguing that the Firm had also represented the buyer in the transaction without disclosing this representation to the Seller and therefore had served as an undisclosed dual agent in the transaction. The Firm argued that it had merely served as a “finder” for the buyer. The trial court dismissed the Firm’s lawsuit, ruling that the Firm had served as an undisclosed dual agent in the transaction.

The New York Supreme Court, Appellate Division, affirmed the lower court. The court found that the Firm’s argument that it had only served as a finder unpersuasive. First, the Firm had confirmed that it had represented the buyer in the transaction through its court filings. Second, an entity acting as a finder has no duty to engage in contractual negotiations. However, the Firm’s court filings indicated it had agreed to negotiate the sale on behalf of the buyer and the Firm claimed that the Seller had agreed to pay the Firm a commission for its work on behalf of both the Seller and the buyer. Based on these facts, the court affirmed the ruling by the trial court that the Firm had acted as an undisclosed dual agent, rejecting the Firm’s argument that the Seller had been unharmed by the relationship. Thus, the court dismissed the Firm’s lawsuit.

P. Zaccaro Co. v. DHA Capital, LLC,,70 N.Y.S.3d 458 (N.Y. App. Div.).

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