Medation Fee for First Agency
הרב Mann Daniel
הרב Levy Sinai
כ"ג באלול תשע"ד
18 בספטמבר 2014
תיק מס' 73077
Represented by her husband, Adv
1. mr L'
2. mrs L'
Represented by Toein Rabbani
I. Description of Basic Facts
The defendants were looking to buy an apartment in Beit Shemesh and were shown several apartments by the plaintiff, a veteran real estate agent in the area, after signing a realtors contract at the rate of 2% of sale’s price. In particular, she showed them an apartment, which they would eventually buy. The process in regard to seeing and bidding on this apartment had several stages. The plaintiff showed the apartment to the defendants a few times, as they were not always available to see it together. The first showing was in the springtime of 2010, at which time the apartment was undergoing construction by its owner and designer, Mrs. C' (the seller) and was not officially on the market. During June, the seller informed the plaintiff that she would be selling the apartment, and her asking price was approximately 3.5 million NIS, which was predicated on her plan to complete extensive improvements in the apartment. The defendants’ initial bid was approximately 2.7 million NIS, and they had no interest in a highly renovated apartment because of the particular needs of their children.
During the course of the summer, there was contact between the plaintiff and the seller, but there appeared to be little progress toward reaching an agreement. In early Autumn 2010, the seller approached an other agent (the second agent) to attempt to sell the apartment. The second agent was aware that the defendants were looking for a similar apartment to the one offered and it became apparent that the plaintiff had already shown it to the defendants. The seller, who later claimed that she had been very unhappy with the plaintiff’s work in this particular attempted sale, asked the second seller to try to go ahead with the sale, with the agreement that he would be paid at a rate of 1.25% of the sales price as his realtor fee if he facilitated the sale to the defendants. The second agent did not have any further demands, including not from the defendants.
The second agent began his involvement in the negotiations between the defendants and the seller. Soon thereafter the seller went abroad to deal with a sensitive family issue for an open-ended time period. During that time she decided that she would not be able to do renovations and would sell it as is. After a few months of negotiations, the seller sold the apartment to the defendants for the price of 2,925,000 NIS.
During the time of the negotiations, no one informed the plaintiff that another agent was promoting the deal until mid-December, and in fact she even showed the defendants at least one other property during this time. The seller decided to tell the plaintiff of the impending sale soon before it took place. The plaintiff was upset and felt deceived by the happenings, and rebuffed the sellers and the defendants’ attempts to come to a financial understanding and sued both in Beit Din for a full realtor’s fee. The din Torah between the plaintiff and the seller took place in a Beit Din in Beit Shemesh, where the second agent and the defendants served as witnesses, and the Beit Din awarded the plaintiff a third of the previously agreed upon fee, as a matchila, one who made the initial introduction of the deal but did not see it through. The Beit Din also instructed the parties, specifically the second agent, to see to it that the matter of payment of the defendants to the plaintiff would be decided by a Beit Din. The plaintiff sued the defendants in our Beit Din for a full 2% + v.a.t., as appeared in the signed agent’s contract.
II. The Plaintiff’s Claim in Brief
The plaintiff showed the apartment to the defendants before it was clear that it was on the market, which is a normal step to take, to consider all possibilities. There is e-mail correspondence that demonstrates that in June 2010 the seller decided to sell, and it is agreed that soon thereafter the plaintiff passed on mutual offers to the sides. While the offers were far apart, this gap could have been bridged if the seller would have agreed not to do improvements. The plaintiff claims that she tried several times to convince the seller to do so. This is what caused the tension between the plaintiff and the seller, which caused the seller to bring in another agent. When due to personal circumstances, the seller decided not to do the renovations, the groundwork which the plaintiff had set into place became almost trivial to see to fruition. It was improper for that opportunity to be given to the second agent, certainly without informing the plaintiff, who could have patched things up, and therefore the plaintiff should be viewed as the goreim haya'il (the effective factor).
Those who begin the process of seeing an apartment are required to continue with that agent as long as he or she is capable of doing so. The plaintiff, who is very experienced, is capable of doing so, and therefore should have been allowed to complete the job and thus is due to the full fee.
Furthermore, the second agent did not take a fee from the defendants, who only gave a donation which was a fraction of an agent’s fee, to a charity dear to the heart of the second agent, and without his request, and therefore there is no reason for the defendants not to pay the plaintiff a full fee.
The claim is for 58,500 NIS plus v.a.t.
III. The Defendants’ Response
According to the civil law of the State of Israel, a realtor is entitled to an agent’s fee only if three conditions are met: the agent is licensed; the agent has the client sign a valid contract; the agent is the goreim ya'il who facilitated the transaction.
The plaintiff failed to meet the requirements for receiving a realtor's fee in two areas:
1. She was not the goreim haya'il, because:
A. The amount of time between the introduction of the apartment to the buyers and the time that another agent was brought in was six months, after which time, it is clear that she failed to sell the apartment and the second agent is to be credited for success in the second round. The plaintiff lied to Beit Din about the timing of showing the apartment, claiming it was in September, to cover up for this critical point (which in general casts great shadows on her credibility). However, the overwhelming evidence against her, made her admit the matter.
B. The plaintiff did little other than to show the apartment to the defendants at a time when it was not even on the market and passed from each side to the other initial price suggestions that were nearly a million shekel away from each other.
C. The plaintiff acted in an unprofessional manner which caused the seller to not be willing to continue working with her. Similarly, she showed the defendants apartments that were not viable for them. Under those circumstances it was understandable that the seller and the defendants would be forced to use a different agent.
D. The second agent did all the important work to get the sale to fruition, including bridging the price gap to a level that the defendants were willing to pay and constructing a mechanism for certain complex timing issues. The plaintiff did not and would not have been able to do it. The plaintiff’s only claim – that she was the gorem ya’il in that she showed the apartment – is not a legitimate claim because the second agent had wanted to show the apartment to the defendants only days after one of them had seen it with the plaintiff. The second agent thus was the agent, and he was indeed paid by the defendants, although he preferred to have it given to the cause of his choice rather than take the money to his own pocket, which would look bad in the eyes of a fellow agent.
2. The plaintiff did not have the defendants sign that she showed them the apartment in question. Rather, they signed a realtor’s agreement regarding another apartment, and it was the plaintiff who added to the contract on her own the address of the apartment in question. Thus, in regard to this apartment, the defendants never signed. Although this is a somewhat technical exemption from payment, this is the law, and given all the above explanations for why the plaintiff’s contribution was not significant, while the second agent’s was, that is sufficient.
The plaintiff’s responses to the defendants claims will be cited below, in the body of the analysis.
IV. Testimony of the Seller and the Second Agent – General Comments
The second agent testified “before Beit Din” via Skype, a process that has fundamental halachic limitations and in this case also had some technical glitches. The defendants’ toein rabbani complained about both of them, but was more than happy to quote those parts of his lengthy testimony that he found supported the defendants' claims. Beit Din is not relying on this one witness as complete eidut (an almost absolute form of corroboration) and certainly do not accept him as an arbiter as to who qualifies as a goreim ya'il, which is a judicial decision, not a factual observation. However, certain things that he said, both before us and before the Beit Din in Beit Shemesh, were significant in rounding out the picture. In general, he gave the impression of wanting to be honest but of trying to avoid taking sides in the gray areas of the dispute, and in not wanting to look bad in his actions, some of which were at least borderline ethically. His memory was also spotty on some of the matters, which is reasonable considering the time that has passed. Beit Din will choose to present those parts of the testimony which in its objective, while human, eyes are not only most pertinent but also most reliable in context. Beit Din will not engage in the arduous task of proving that its understanding is more accurate than that found in the summaries of the litigants.
Regarding the seller, Beit Din read and heard some of her words in e-mails presented to Beit Din and in her claims in the Beit Din in Beit Shemesh, respectively. [Beit Din wishes to point out that after receiving written consent from both sides, we and the parties received a recording of the proceedings from that Beit Din in Beit Shemesh. The sides referred to these recordings both in the second hearing and in their summaries.] She is likely to have been biased by her position as defendant in Beit Din and to have been on the defensive in her communication with the plaintiff. However, she, like the second agent and in some ways more so, gave the impression of telling things basically honestly – from her subjective and somewhat myopic perspective. Beit Din very much would have preferred to hear her testimony in person and to be able to ask her certain questions, which we felt could have helped solidify the picture as we saw it developing. However, the defendants’ scheduling difficulties, which stretched out this process well beyond our hopes, and the relative indifference of the plaintiff on the point of the seller’s testimony before us, caused us not to have that opportunity. However, we will, as above, cull information from various parts of her “presentations in abstentia” the way we see them, and in the context below.
V. Beit Din’s Analysis of the Basic Claims of the Sides
The plaintiff’s claims are relatively straightforward. She showed the apartment and began the negotiating process as an agent. She did nothing wrong and therefore should not have been removed and deserves her full fee. It is in the response of the defendants that we are presented with claims of several distinct reasons to withhold that pay, and so we will present our analysis along those lines.
This Beit Din generally accepts the Chok Hametavchim B’mekarkein (Law of Real Estate Agents) 1996 as the law of the land, by virtue of a combination of its general outlook toward commonly practiced laws of the State of Israel and the logic behind its provisions, a condition spelled out by the Chatam Sofer. Beit Din has researched the matter of the interpretation of the law, especially the determination of the identity of the goreim ya'il, by the courts, which while varied, is perhaps best put in context by the landmark guidelines of former chief justice Meir Shamgar in Moskowitz vs. Bir. We will not go into great detail, which we did more of in previous rulings. We will point out our understanding that the intention of the law, and the only way it can be applied without destroying the profession of real estate agents, is that a real estate agent who is acting reasonably cannot be pushed aside and/or replaced by another unless the proposed transaction becomes moot and is to be replaced by a transaction of a significantly new nature. With this in mind, we begin to analyze the specifics. In cases in which one could argue that the courts’ approach is different than ours, we contend that Beit Din has the right to rule according to halacha and/or its judgment.
1. Reasons the plaintiff may not have been the "goreim haya'il"
A. Lapse of Time
It is agreed that in broad terms, the plaintiff introduced the apartment around the time of Pesach of 2010, it “went on the market” around Shavuot time, and the plaintiff had not succeeded in bringing the sides to agreement by the time of the Tishrei holidays.
Neither of these stages (only a few months each) is unusually long in real estate sales. The lapse of time is therefore a total non-issue. Even according to the description of the chain of events of the defendants (which also seems to have changed somewhat from the presentation in the Beit Din in Beit Shemesh to the summaries before our Beit Din), lapse of time is a non-issue. The fact that the plaintiff had not succeeded to sell did not mean that she was out of the picture.
In fact, both the seller and the second agent mentioned that they were troubled by the fact that the British couple whom the second agent wanted to introduce was the same one that the plaintiff had introduced. Furthermore, no one even suggested that it did not pay to raise the issue since the defendants and the seller had already long before given up hope of coming to an agreement.
(In the defendants summaries, much is made of the plaintiff’s alleged claim that she first showed the property to the defendants in September. In fact, she mentioned September, apparently understanding the dayan’s question to be when did the involvement of another agent begin, and her husband clarified the timeline within seconds of her misspeech. In general, neither side was completely free from mistakes at different parts of the presentation. In general, this ruling is not based on Beit Din deciding to accept the claims of either side as more credible in the factual realm than that of the other side.)
In summary, there was no lapse of time significant enough to justify excluding the plaintiff as a goreim ya’il.
B. Lack of Contribution of the Plaintiff to the Process
This point is one that needs to be considered carefully. It is clear that the plaintiff did not get the sides to the point at which a sale was anywhere near imminent, and indeed both the plaintiff and the defendants were exploring other avenues for the defendants.
On the other hand, not in all cases is an agent called upon to take an active role in the negotiations, and for the most part he receives the full fee even when he does little more than show the property and introduce the parties. As far as effort is concerned, the plaintiff showed the apartment to the defendants more than once (the exact number is not clear). She was also in contact with the defendants several other times (in addition to her efforts in showing them many other properties, which is irrelevant on legal grounds but perhaps of note on moral grounds). Apparently, the plaintiff was successful in convincing the defendants that other than the question of price, the apartment was suitable for them (Beit Din has no way of knowing whether that was a significant or trivial accomplishment, but that is part of an agent’s job).
The plaintiff was also in contact in this regard with the seller several times and was involved in significant, if not initially successful, negotiations with her on the defendants’ behalf. We do not know if the defendants were aware of it, but this is clear from the seller’s presentation, and is a basic lynchpin of both the seller’s defense in the Beit Din in Beit Shemesh and the defendant’s defense in these proceedings, as we will explain.
The seller describes in very vague terms that in repeated conversations, the plaintiff did not seem to internalizing her needs and decisions and was repeatedly making suggestions that were not tenable for the seller. Despite their history of good professional and personal relations, the seller claimed to find it impossible to work with the plaintiff in regard to this transaction. However, the seller could not, only months after the events, remember exactly what it was that was wrong about the job the plaintiff was doing.
The inability to clearly identify what the plaintiff was doing wrong makes it difficult to accept her removal of the plaintiff. On the other hand, there seems to be no ulterior motive (including none that the plaintiff could give) for why the seller chose to discontinue her use of the plaintiff (saving money is conceivable, but considering that she had to pay the second agent and she was willing to pay something to the plaintiff as well, that seems difficult). By far, the most plausible theory is that which the plaintiff suggests – that the plaintiff continuously tried to convince her to sell the apartment to the defendants without first doing improvements, while the seller repeatedly told her that she was committed to the improvements.
We will now explain why this is the most logical possibility – in addition to the fact that there was no other coherent one that was presented. The defendants complained about the plaintiff that the price was much too high and that the improvements were actually detrimental considering their family’s needs, in which case the plaintiff’s explanations as to how good the seller was at improvements was irrelevant. The seller said that she was committed to the improvements and therefore the higher price was inevitable. The only way that the agent who would not give up hope could bridge that gap was to convince one of the sides to change its approach – or to convince both to compromise their approaches. This indeed could be annoying to both the potential buyer and seller, who knew their own needs and did not want someone trying to convince them that they should do what someone else wants.
When the seller engaged the second agent, there apparently was a hope that he would do a better job of negotiations. However, he had no way of changing the basic problem. While the apartment as it was, fit the defendant’s needs, the seller’s plans for it did not. And as the fact (which they agree to) that the defendants continued to see other properties indicates, the second agent did not have skills to magically make that problem go away.
As the seller continued to tell the story, apparently without realizing this claim’s significance, things worked out so that pressures that developed in the seller’s life prevented her from continuing with her plans of renovations (:33 of Beit Shemesh recording). As she explained, she told the second agent that the buyers would have to take the apartment as is. The plaintiff wanted to take credit for planting the idea in the seller’s mind. Beit Din thinks that this is a stretch, as the seller, who was away and preoccupied with her family issues, seems to not have remembered that this is exactly what the defendants wanted. It is not clear what the seller would have remembered and returned to the plaintiff and her clients, the defendants, if the second agent had not gotten involved. Would there have been a connection between the seller and the plaintiff that would have enabled their resumption of negotiations under the new circumstances or not? However, there does not seem to be a reason why it could not have happened.
Let us return to the legal implications of the most likely scenario. The seller honestly and understandably felt compelled to replace the plaintiff. She wanted to sell the property according to one plan, and the plaintiff did not seem able to provide her with a client. However, from the perspective of the defendants, the plaintiff had done exactly what they had wanted – try to get the apartment, as is, for a price near to that which they had offered.
Therefore, in regard to the question of whether the plaintiff did significant work on their behalf, the answer is that she had, but she was excluded from the scene at the point that that work was not ready to see fruition. Eventually, it would turn out that with the change in the seller’s predicament, the situation without the help of the second agent was such that the defendants and the seller could have been close to agreement, and just the final stage of negotiation was undone.
C. The Question of Unprofessional Work of the Plaintiff
1. In relation to the Defendants
The original complaints against the plaintiff were as follows:
a. She showed an apartment that was not on the market – This is not a valid complaint. It is often advantageous to see an apartment that is not on the market. An agent cannot always know in advance how long it will take for it to go on the market. In this case, the approximate three months was not a terribly long time. We note that this is exactly what the second agent tried to do a short time later, according to the defendants and him. Of course, as it turns out, some nine months later, the defendants bought that property.
b. For a long time, she did not know a price – that is to be fully expected when an apartment is not yet on the market. It is clear that within a short time after it went on the market, she relayed the price.
c. She was unable to get the price to something they could afford – given that the seller was unwilling at that time to consider not doing improvements, . this is not the agent’s shortcoming. As mentioned above, Beit Din is under the strong impression that she made strong efforts, which backfired on her, to be responsive to their needs.
d. In a letter written by defendant #2 well after the last hearing and before the summaries (Beit Din warned the defendants that any new claim that would not be debated in Beit Din would be likely to not considered less impactful), she wrote the following:
The plaintiff repeatedly showed apartments that were not feasible –
It is common that some of the properties an agent shows are not tenable, and it is not rare for one that is initially not viewed as tenable to later become tenable.
In any case, Beit Din did not see any substantiation of this claim. By the great number of properties the plaintiff showed the defendants, one gets the impression that they did indeed value her ability to show them apartments. Had they not, they would have stopped seeing other apartments with her. Their admission that they had the plaintiff show them a property after the second agent already took over responsibility for negotiations on the apartment in question, raises questions about the relevance of the point. In fact, the defendants admitted to have made an offer on one of the other apartments that the plaintiff showed them (:56 of Beit Shemesh recording).
Finally, the question here is not whether the plaintiff was able to show a feasible apartment, which the one in question obviously was, but whether the plaintiff was capable of assisting in negotiations. If the point is that it was evident that the plaintiff is not capable of doing any part of her job reasonably, Beit Din wonders how she has managed to stay in business as long as she has.
Therefore, Beit Din rejects the relevance of this claim.
2. In relation to the seller – As we pointed out the seller was not able to explain clearly what was wrong with the job done by the plaintiff in regard to her. Beit Din leans toward believing that she was not justified in unilaterally releasing the plaintiff from a job to which the seller was committed to allow her to see through, certainly without informing her and allowing her to try to work things out. Again we regret that neither side pushed sufficiently to have Beit Din question her. While the seller is not a party to this matter, the answer to this question does have some impact on the ruling.
In the absence of any substantiation of what it was that the plaintiff did do, Beit Din’s fallback position is to assume that an experienced, licensed agent most probably acted within the realm of reasonable behavior, until something different is substantiated. This is strengthened by the theory that seems most plausible to Beit Din, as spelled out above.
D. The second agent did the main job, or at least a significant part of the job
1. Beit Din has little reason to doubt that the second agent did a credible job and that he did accomplish significant things for which he deserves to get paid. Beit Din does not feel a need to deal with the question if he should have pay denied to him due to the likelihood that he should not have entered into the transaction when the plaintiff had apparently earned the right to see the potential purchase through, certainly without first consulting her and without ensuring that she was compensated appropriately for what she had done. It was appropriate that the seller paid him, given that she had told him that she would pay him a flat amount irrespective of what the seller would have to pay the plaintiff. Based on the rule that one Beit Din does not comment on the ruling of another Beit Din, we will not delve into the matter about which the Beit Din in Beit Shemesh ruled – that the plaintiff was entitled to a third of the normal fee from the seller – as a matchil but not as one who deserved the pay of one who finished the job.
However, we point out that the relevance of the second agent’s work on the defendants’ obligations to the plaintiff is a very different matter than the seller’s. We will explain the distinction.
The seller is the one who felt at the time that she could not continue with the plaintiff, while we have not accepted any claim that the plaintiff was not functioning reasonably from the perspective of the defendants. The defendants claimed that they could not have continued with her because the seller was not willing. If indeed this was the case, they would have been in a dilemma, and a shayla, if done properly, would have been appropriate to ask.. However, neither the defendants, nor the seller, nor the second agent identified a reason why the plaintiff could not have continued with some role (perhaps, in reduced prominence, but with the same or similar financial remuneration) as the agent of the buyers. In fact, the seller said repeatedly that she did not think she was harming the plaintiff, believing that the plaintiff would still get a nice cut of the proceeds and further said (including an e-mail of Dec. 16, 2010) that it is common for there to be different agents for the two sides and that she viewed the second agent as her agent and the plaintiff as the defendants' agent. It is possible that she was saying this out of self-interest, but in any case, Beit Din agrees that this is a reasonable possibility.
The second agent did say that there are times when an agent prefers to do the work of both sides, and it is very possible that this is such a case, as he claims. However, Beit Din agrees with the implication of the second agent, namely, that it is not that in such a case the less active agent loses his or her rights to a fee, but rather that the other agent feels he or she is best served by voluntarily doing more than half the work in order to heighten the chance of success and closing the deal to the advantage of all. In such a case, it is generally not proper to invoke the goreim haya'il stipulation and give the more active agent payment at the expense of the less active agent, as long as the first agent did not improperly disappear from the arena.
The matter is all the more clear in this case. Most of the litigation regarding goreim haya'il discusses cases where an alternative agent demands money for his or her services, and it is a question of whom to give the money to. While it is possible to rule that both have to give, it is problematic to require a client to pay more than is normal to be paid, simply because it is not clear who was the goreim haya'il. However, when there are two agents involved and only one is demanding a fee while the other is not, then the fact that the latter assisted the former is not an excuse for the client to refuse to pay the full amount, and certainly not to allow him to not pay any amount at all.
The matter is even clearer than usual in this case. The second agent was well aware that he was treading on thin moral grounds when he agreed to take the place of the plaintiff without clearing the matter with her. He justified the matter in front of both Batei Din and we would imagine to himself at the time, that he made an agreement with the seller that what he was receiving should not preclude appropriate payment from the seller to the plaintiff and that he was not going to receive any pay from the defendants (1:28 of Beit Shemesh recording; end of pg. 9 of transcript of hearing #2). One would imagine that if he had known that because of him the defendants would refuse to pay the plaintiff, he would have been honest enough not to have agreed to get involved.
It is not logical to have a system where one obligates himself to one agent, and in cases like this strengthen it, as required by law, by signing a written contract that spells out the basic relationship between agent and client, and then have a significant financial incentive to stop using him after that person has provided the most important service in most cases – identifying the property that is available. This leaves the door open to looking for another agent to be the goreim haya'il at a lower price or do it oneself at no price. While application of the law’s clause of goreim ya’il is logical in extreme cases, where it can be substantiated that the efforts of the first agent reached a permanent dead end, claims of the type raised by the defendants in this case are not sufficient grounds. One must remember that agents can show dozens and even hundreds of apartments in a responsible manner without positive results. To take the cases where they showed the apartment that was bought and make them prove that they were, not only could have been, a crucial factor at every stage, makes it impossible to make a parnasa as an agent, which was not the legislator’s intention.
The defendants argued cogently that the major contribution of the plaintiff, which was to bring the property to the attention of the defendants, was not really a contribution in this case, where the second agent knew about the apartment and soon thereafter told them about it. Assuming that this is true (although it was not proven), there is indeed some logic to this claim. Nonetheless, this is a claim that cannot be made in the field of real estate agency. In a high percentage of cases, more than one agent, and in fact non-agents, are aware of the same apartment. Are we to say that the question of who gets credited for the information is up to the discretion of the client, who can base himself on whatever criteria he desires? It is clear that the uniform practice, which is of halachically recognized significance, is that the first agent who informs the buyer about the property gains the rights of agent. This enables him to receive the fee for finding, if that is all he has done, and to earn the right to continue the process and receive full payment. This is all the more certain in cases in which the agent has the buyer sign an agent’s contract. Thus the fact that the second agent apparently would have made the introduction is not of significance. (We find parallels in other areas of halacha – see Tosafot, Bava Kama 17b regarding one who broke his friend’s vessel moments before the arrow that another person had previously shot was about to break it; the former is the one obligated for damages even though it would have been broken soon thereafter.)
2. Payment to the second agent
The defendants claimed that they did pay the second agent an agent’s fee. Beit Din rejects that notion. Even according to their version of the story, the second agent did not make any legal demands of them, and at the most made them feel he had expectations. According to the second agent’s testimony, he did not require them to pay on any level, and even refused to take pay. Upon their prevailing upon him to accept some form of hakarat hatov, he indicated that they could give a donation to the kollel with which he was affiliated. That is not a demand of payment, and there was no claim that the kollel was a front to get money to him. The payment was tzedaka, from the perspective of the law could have been used for a tax deduction (if the kollel is recognized) and from the perspective of halacha could come from ma’aser kesafim funds. The defendants heard him say on the record in Beit Din in Beit Shemesh either soon before or soon after the donation that he was not going to receive payment from them, and they were silent. The fact that the amount given was 10,000 shekel, approximately 0.3% of the sales price of the apartment, further indicates that they did not consider him their agent.
The defendants were and should have been well aware that there was a legal and halachic question whether and how much they should be paying the plaintiff. To the extent that they were unwilling to pay both the plaintiff and the second agent, they could have expedited the process of adjudication or alternative conflict resolution before giving the money to the kollel of the second agent’s choice.
It is appropriate at this point to discuss application of a most cogent source raised by the defendant’s toein rabbani, the Pitchei Teshuva in Choshen Mishpat 185:3. While we will not analyze every section of this long piece, we agree that it certainly does point out that in shadchanut there is a concept of a matchil, who while introducing the property, is not entitled to the full fee, as a significant amount goes to the gomer, the one who completed the deal. In the closing portion, he also talks about a situation where one does not even get a fee as a matchil because the gomer could also have easily made the original introduction.
However, we do not believe that, in a case of real estate agency such as this, these opinions cited in the Pitchei Teshuva apply. First, one of the great rules of Choshen Mishpat, which the Pitchei Teshuva cites in this passage as well, is that we follow the minhag within a certain place at a certain time. The minhag among real estate agents and clients is that one cannot, under normal circumstances, switch agents after the initial introduction. This is in contrast to that which is stated by the opinion cited in the Pitchei Teshuva in his context, and which is likely a major factor in his presentation – that it is a daily occurrence that people start with a matchil and finish the deal with someone else. Regarding shadchanim, it is actually common to take the idea of a prospective spouse from one person but choose to have a different person continue the shidduch process.
We know that all the participants in our case realized that the involvement of the second agent was a great departure from the norm. That is why the seller was very embarrassed about switching, the second agent avoided in the strongest way being seen as doing so, the defendants were willing to keep the matter of the second agent’s activities and identity secret, after apparently asking some sort of shayla on the matter. (The plaintiff, for her part, repeatedly spoke of a ‘war’ among agents in Beit Shemesh if this type of activity started to become a trend). It is telling that although the defendants raised many claims, they did not make the claim that halacha allows one to switch at will.
There is an additional reason that the assumptions of the Pitchei Teshuva do not apply to this case. In the contract that one of the defendants signed, paragraph 4 states that the agent is to be paid if the clients buy the property to which the agent introduced them. There is no condition mentioned that this is only if she carried out negotiations. While we agree that there are situations that the payment would not be due (e.g., the agent refused to help in negotiations, …), one cannot compare our situation to that of the Pitchei Teshuva, where there are no discussions in advance about conditions for payment. Beit Din also does not accept the claim that the contract does not apply to this property, for the reasons stated below. We add that even if the agent’s contract would not fulfill the conditions of the Law of Real Estate Agents, it still halachically sets out the relationship regarding all properties seen unless there is a reason to believe that different conditions apply to the agency regarding a specific property.
Perhaps it is worthwhile to explain the apparent rationale behind the different minhagim in these different fields of agency. Anyone can suggest a shidduch or a business deal, and he does not necessarily have the abilities or experience to carry out negotiations. The suggestion can also come out of the blue, without the accepting side being prepared to commit themselves to the person making the suggestion. The Law of Real Estate Agents set out to fight that phenomenon. Thus, the agent must be licensed (meaning, they know the trade on a reasonable level and can lose their license for repeated unprofessional behavior). The client also has to sign a contract, proving that they are aware they are making a commitment. Under such circumstances, it is very logical that the minhag be that after choosing a certain person as an agent, there is a very strong commitment not to switch agents in the middle of the process.
2. The Questionable Signature on the Agent’s Contract
The defendants claim that even if the plaintiff is deemed to be the goreim haya'il, she lost her right to receive a fee because the signature on the agent’s contract is invalid. The plaintiff admits that her common practice is to sign a client on one contract when the client sees the first apartment and then to add further properties to the list after she shows them. She said that this is also the common practice of many agents. The defendants argue that since this allows the agent to add properties to the contract at will, including when it is patently false, the document is valueless in regard to the additional properties.
Beit Din agrees that the system the plaintiff uses is not an effective one, and it does not indeed protect the agent from the claim of forgery, unless the client later adds a signature or at least an initialing to each address added. However, in this case, there is no claim of forgery, and the toein rabbani was apologetic in saying that he does not like making such a claim, which is purely technical in nature. All agree that the plaintiff showed the apartment to the defendants in a manner in which their obligation to her was clear to them, and that they would been agreeable to signing the contract in regard to this property.
Beit Din agrees that it was correct to be apologetic and absolutely wrong to raise the claim, on two grounds. The first one is on moral grounds. If Beit Din determines that the plaintiff is the goreim ya’il, then the defendants should accept the determination and pay without looking for loopholes. There are many, many agents who never or rarely sign clients on agent’s contracts because they trust the erlichkeit of the client. Do the defendants advocate following the law of the land in a case where it creates a perversion of justice? We will be melamed z’chut on the defendants and interpret their claim as follows. If Beit Din would rule in favor of the plaintiff regarding the question of the goreim haya’il, they would be mistaken, and therefore getting off on a technicality would be proper. Beit Din is still not impressed with that approach, and sees it as an attempt to exempt oneself at the price of holding on to the “altar of the strict technical law.”
Furthermore, Beit Din does not agree with the validity of the claim on legal grounds either. There is logic to the Law of Real Estate Agents and that is to prevent unwarranted charging of fees. The logic of the requirement for a contract is that there are a times that an agent shows an apartment to someone without ‘the client’ realizing that he is obligating himself to the agent. As one of several possible examples, sometimes the two are friends and the client thinks it is being done as a favor.
However, when the relationship is clearly of a professional, for profit nature, even if there were a technical flaw in the signing of the document, as long as the pertinent facts are not in dispute, this provision of the law does not preclude payment. If one will find a ruling in the government courts that contradicts our application of the law, this is of no interest to Beit Din, as we are free in ruling based on din Torah to interpret the law of the land in a way that is according to halacha and the reasoning of Beit Din. Realize that based on the laws of hired workers, it is clear that the absence of a signed document is not an issue, and for the law to uproot that halacha, it has to be clear and/or create a clear common practice. Common practice in many circles is to not be careful about signing at all and certainly not to make the process a cumbersome technicality which is insulting to one’s client. Ironically, the second agent’s involvement is a classic example of this. His role as an agent and his financial rights would have been very unclear regarding the defendants (had he chosen to demand money from them) and in this regard it would have been far more reasonable to claim that since he entered the picture in mid-process based on the initiative of the seller, he would have no claims on the defendants unless they signed a clear agreement.
VI. Degree of Obligation
Beit Din views the question of the degree of payment as a difficult question. It is clear to us that the seller, the defendants, and/or the second agent should have found an appropriate time and way to come to a financial understanding with the plaintiff prior to finalizing the deal. Had our Beit Din been called upon to help adjudicate at that point and the spirit would have been one of finding a solution that was fair for everyone, it is likely that it would not have been difficult to do so. The plaintiff had been promised, if successful, a 3.5% commission between the two sides; 2% from the defendants and 1.5% from the seller. (There was some question whether the seller had promised 1.5 or 2%, but without a signed contract and with the seller being more confident of the number than the plaintiff, this is what the Beit Din sees appropriate to assume). The second agent had been promised 1.25%. A reasonable compromise might have been for the seller to give 0.5% to the plaintiff and 1.25% to the second agent (as the Beit Din in Beit Shemesh ruled), and the defendants would pay their entire 2% (which they had already planned to pay for agency) to the plaintiff and nothing to the second agent. The plaintiff would thus receive 2.5% instead of 3.5%, which is still a nice earning, considering she was not asked to finish the deal and that there is some question as to whether the chemistry would have worked had the second agent not gotten involved.
For whatever reason, no package compromise was arrived at, not before the sale and not thereafter. Both sides hinted that bruised feelings played a major role. Both sides also approached our Beit Din interested in din, not compromise, and bolstered their sides with forceful claims. As this Beit Din has shown in its analysis, the plaintiff’s claims are correct in regard to the halacha and according to a sense of natural justice, in our belief according to the law of the land, and the plaintiff deserves full payment.
However, the payment in full has to be adjusted somewhat. The halachic category through which to obligate the defendants is that of hired worker, whose work was stopped in the middle after there had been an obligation of the employer to allow full work and receive full pay. However, in such a case a reduction is made for the financial adjustment to reflect the preference that a person has to exempt himself from the extra work (po’el batel – Bava Metzia 77a). In the case of a real estate agent this is a small fraction of the agent’s fee. As we have explained the nature of the payment to an agent is that in many cases he works hard and is paid nothing while in others he is paid a large fee for the success in which he played some part. We assess the discount for reduced work in a case like this as 1,000 NIS. The dayanim were not in full agreement to what extent this reduction is an expression of din or of peshara.
There could be room to consider an additional reduction based on compromise. As mentioned, part of the defendants’ claims had logical merit. However, Beit Din decided not to take that approach. First, both sides seemed set on din and not compromise. Second, Beit Din points out that full payment is not a real loss for the defendants, as they received the apartment without paying more of an agent’s fee than they originally agreed to. If they regret giving a donation of 10,000 shekels to the charity of the second agent’s choice, that was their own doing. Additionally, considering that the seller paid only 0.5% to the plaintiff in the settlement in Beit Din, if we make a compromise based on the reasonable contention that a significant part of the job was not done by the plaintiff, then she will receive less than we believe she should have gotten in total. Therefore, fee due is 57,500 NIS plus v.a.t., as required by law.
VII. Court Expenses
In most cases, the halacha and policy of Beit Din is that the two parties pay their own expenses and split the Beit Din fee. If one of the parties created the need for the proceedings by acting in bad faith, when they should have paid or not have sued, respectively, they are required to pay the full expenses. Our case is not clear cut in this regard. On the one hand, it is clear to Beit Din that the defendants should not have kept for themselves savings of at least close to 50,000 shekels by the second agent replacing the plaintiff, without offering a significant agent’s fee. On the other hand, it is possible that they believed and relied on an honest, albeit misguided understanding of the provision of goreim haya’il.
A significant question is whether the defendants offered the plaintiff a significant compromise. The plaintiff said that they did. The defendants were not willing to admit it, complained that it is wrong to disclose compromise offers, and said that even if there were an offer, it was in no way an offer based on the plaintiff’s rights but a gesture to avoid argument. In any case, the exact development of events is unknown to us, and we will suffice with the normal division of the Beit Din fee, equally between the two parties.
VIII. Final ruling:
1. The defendants, Mr. L' and Mrs. L', are obligated to pay an agent’s fee of 57,500 New Israel Shekels plus v.a.t.(10,350 NIS) to the plaintiff, Mrs. B'.
2. The plaintiff paid a fee of 731.00 NIS to the Beit Din. The defendants are to take part in half of that expense and are therefore to pay the plaintiff an additional 365.50 NIS.
[Sum total: 68,215.50 NIS]
3. Payment is to be made by 26 Tishrei 5775 (October 20, 2014).
4. We urge each side to forgive the other side for harsh statements that were said and to sincerely wish each other a ketiva vachatima tova.
The ruling was rendered on Thursday, 23 Elul 5774 (September 18, 2014).