Sec. 196. General Statement

In some jurisdictions it is held that the commissions on a lease procured by a broker are not earned until the lease is negotiated, or a valid contract for a lease has been executed. But a failure of the lease due to the landlord's misstatements or unreasonable requirements will not defeat the broker's claim for commissions. (Sec. 197.)

The general requirements for recovery of commissions for procuring a lease are the same as in the case of commissions on a sale. (Sec. 198.)

A tenant is not liable to the broker for commissions unless some service has been performed at his request by the broker. (Sec. 199.)

The broker's commission for procuring a lease is usually a percentage upon the agreed rental though sometimes a percentage on the values involved. (Sec.200.) The failure of a lease does not ordinarily affect the broker's right to commissions (Sec. 201), as the landlord has a remedy against the tenant for unpaid rents, and the broker cannot be held responsible for the landlord's failure to collect. (Sec. 202.)

Sec. 197. When Broker's Obligations Are Performed

In regard to leases, as in the case of sales and loans,1 there is a conflict of opinion as to when the broker is deemed to have performed his obligation. In New York it is held that where a broker undertakes to procure a person to take a lease of the owner's property, he cannot recover until he establishes that he has earned his commissions either by negotiating a lease or procuring the execution of a valid and binding agreement for such a lease. It is not sufficient that the parties were brought together in a negotiation, unless that negotiation ended in a lease or a valid agreement for one. This is so held in Crombie v. Waldo, 137 N. Y. 129 (1893), where there seems to have been nothing further than the usual undertaking of a broker in similar matters, but the court assumed that the broker entered upon an employment to procure a tenant to take a lease of the defendant's premises, and undoubtedly that is what a broker in such cases undertakes.

See Sec. 117-119, 185 supra.

But in the same case 2 it is said that the actual execution of a lease in every case is not necessary. Thus, where real estate brokers are duly employed by a landlord and procure a tenant who agrees to every term and condition originally proposed by the landlord so that the minds of the parties meet, but no lease is signed, owing to the landlord's insistence on new and unreasonable terms, the brokers are entitled to commissions,3 and this is also so where the lease fails on account of misstatements made to the prospective tenant.4

In Mears v. Jones, 102 Me. 490 (1907), there is a dictum to the effect that to earn his commission it is enough for the broker to secure one willing to become a tenant upon the principal's terms, and bring him to the principal for acceptance as such.

Sec. 198. General Requirements For Recovery Of Commissions

All the usual requirements as to recovery of commissions must be met to entitle the broker to recover his commissions for negotiating a lease. He must show employment, express or implied, as well as the other essentials.5 A custom to the effect that where brokers negotiate a lease the owner pays the commission, cannot fasten upon a property owner any liability as the employer of a broker, simply because this owner consents to let his property to a tenant who is induced to lease it through the agency of the broker without any request, express or implied, on the part of the owner.6

Crombie v. Waldo, 137 N. Y. 120 (1893).

Tanenbanm v. Boehm, 126 App. Div. 731 (N. Y. 1908).

4 Washburn v. Bradley, 169 Mass. 86 (1897). See also Sec. 172-174 supra.