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A New York court has considered the appropriate punishment for an unlicensed individual receiving a real estate brokerage commission.
Marion Handy ("Owner") sought to sell her home. The Owner retained Ilan Cohen ("Cohen") of Miriam Home Sales, Inc. d/b/a Miriam Development ("Miriam") to find a buyer for the property. Yezol, Inc. ("Purchaser") made an offer for the property. Cohen was corporate secretary for the Purchaser and his brother was the president of the Purchaser, and Cohen worked on behalf of the Purchaser in this transaction as well. Neither Cohen, Miriam, or the Purchaser possessed a real estate license nor was Cohen's dual role disclosed to the Owner.
At closing, a "broker's fee" was set aside for Miriam to be paid by the Owner. Cohen, representing both Miriam and the Purchaser at the closing, took possession of the check and the Purchaser deposited the "broker's fee" into its bank account. Eventually, the Owner brought a lawsuit against Miriam, Cohen, and the Purchaser alleging fraud, conversion, and violations of New York's license law. Following the submission of evidence to the court, all parties moved for entry of judgment in their favor.
The City Court, City of Mount Vernon, ruled that the evidence showed Miriam and the Purchaser had violated New York's license law because an unlicensed individual had received compensation for performing brokerage services. Such a violation carries with it a maximum damage award of quadruple the amount of the commission.
The court considered whether it should award the Owner the maximum damage award. The court stated that there was no question that the state's license law had been violated. Indeed, the evidence in this case demonstrated why these rules are in place, as during purchase negotiations, Cohen had instructed the Owner to lower her offer to the Purchaser. The court found that due to the "extraordinary facts" of this case, quadruple damages were appropriate and so awarded the Owner damages equal to quadruple the commission amount.
Handy v. Cohen, 759 N.Y.S.2d 627 (N.Y. City Ct. 2003), aff’d as modified, No. 25143, 2005 WL 856806 (N.Y. App. Div. Apr. 13, 2005).