Sec. 199. Liability Of Tenant For Commissions

Where a broker comes to the tenant apparently as the agent of the landlord, and after negotiations are begun, states that the landlord will pay no commissions, a promise on the tenant's part to pay the commissions is without consideration, unless there can be found either an employment of the broker by the tenant, or the performance by the broker of some service at the request, express or implied, of the tenant.7

Sec. 200. Amount Of Commissions For Procuring Lease

A subsequent chapter is devoted to a consideration of the amount of commissions.8 The rates charged in the larger cities appear in Part VII of the present volume." From the lists there given it will be seen that the broker's charge is usually a percentage on the agreed rental, although in some instances the charge is based on a percentage on the value of the ground, or on the appraised value of the property or otherwise. As to this latter method it was, however, said in Daube v. Nessler, 50 111.

5 See Ch. IX supra.

6 Brady v. American Mach. Co.. 86 App. Div. 269 (N. Y. 1903). 7 Myers v. Dean, 132 N. Y. 65 (1892). See also Sec. 121 supra.

8 See Ch. XXII infra.

9 See Forms 1-16 infra, Ch. XXXVIII.

App. 166 (1892): "It is absurd to suppose that commissions for services in negotiating a lease can be measured by the value of the fee, regardless of the terms of the lease; the same for a term of one year as for ninety-nine."

Where the broker's commissions are, by agreement, fixed at a specified amount, there would, of course, be neither occasion nor right to resort to charging the customary rates.10 Or where, as is sometimes done, the agreement is made that the broker is to get all above a certain specified rental, the broker is entitled to nothing unless the lease he obtains provides for a sum in excess of that named, and he is, of course, entitled to all in excess of the agreed amount. Where the agreement was, "All you get above $2,000 per year you may have as your commission," and the broker obtained a five-year lease at a rental of $2,200 per year, the agreement was construed to mean that the broker gets nothing unless the annual rent of the tenant he secures is over $2,000; but beyond this that he is entitled to the excess over $2,000 per annum for the life of the lease, and not only to the excess of the first year's rental.11

Sec. 201. Effect Of Failure Of Lease

As stated in Sec. 172, and the other sections there referred to, the failure of a customer to perform his contract does not affect the broker's commissions. In other words, when applied to procuring a lease, it means that when the landlord and the tenant produced by the broker have entered into a lease, the full commissions are earned, and the failure of the tenant to subsequently carry out the lease will not affect the broker's right to retain or recover his full commissions, unless, of course, the landlord and the broker had agreed otherwise. Thus in Mears v. Jones, 102 Me. 490 (1907), the broker procured a lease for five years subject to the landlord's right to terminate the same if he meanwhile sold the property, the lease also giving the tenant the first right or option to purchase at the same figure which the landlord might be offered by any other prospective purchaser. At the end of the second year the property was sold to the tenant's wife and the question was then presented whether the broker was entitled to commissions for the three years following the sale of the property.

10 See Sec.5 213, 222 infra.

11 Goldstein v. D'Arcy, 201 Mass. 312 (1909).

The court said: "The commission of a real estate broker is usually understood to be a certain percentage upon the consideration paid, or offered to be paid or received. In the case of a sale, the problem is easy. The consideration is a single amount. In the case of a lease with annual rentals for a specified term, it would be reasonable to expect that the amount of commissions would depend, in some respects, at least, upon the length of the term contracted for. It would not be natural to expect that the parties understood that so large a commission would be earned in securing a lease for one year as one for five years. And that the parties in this case understood that the commission was earned and was to become payable in annual installments, is, we think, reasonably to be inferred from the annual payments made while the lease was in force. And we agree with the plaintiff that he was entitled to annual commissions for the full term of the lease. But what was the full length of that lease? We think it was not for five seasons absolutely. It was for five seasons unless the property was sold in the meantime. It was a lease for five seasons, but determinable by a sale within that term. It was made determinable by the very lease which the plaintiff procured. He therefore did not procure a lease for full five seasons, but a lease which might lawfully end sooner. He is entitled to his earnings for the kind of a lease he secured. He was employed to get a tenant for one or more years. The longer the term he secured, the greater the amount of rentals, and naturally the larger the amount of his commissions in the whole. He took the chances of sale. It matters not that the limitation in the lease was for the defendant's benefit, and may have been made, as it probably was, at the defendant's direction. If it was so limited at the instance of the defendant, it was just the same kind of a lease which the plaintiff undertook to procure and did procure. And the amount of the rentals which was the consideration of the lease, and which naturally would be the basis of commissions, would vary according to the length of time which should elapse before the lease was determined by sale."