After months of searching, Daniel finally found the perfect apartment – a sunny four-bedroom just a short walk from his office. The real estate broker, Mr. Sorscher, had shown him half a dozen places before this one.
“I think this is it,” Daniel told Mr. Sorscher, smiling as he signed the lease with the landlord. “Thank you for helping us find such a great place! You really made it easy.”
Mr. Sorscher handed him his business card. “My pleasure!” he exclaimed. “I’ll email you the invoice for my broker’s fee.”
The very next morning, though, Daniel received an unexpected email from work. “Due to company restructuring,” it read, “your department is relocating to Chicago next month.”
Daniel slumped in disbelief. Moving hundreds of miles away meant he couldn’t take the new apartment after all.
He immediately called the landlord. “I’m really sorry,” Daniel said. “I just got notice that I’m being relocated. I won’t be able to move in.”
The landlord sighed. “That’s unfortunate, but I understand,” he replied. “I’ll release you from the contract – but we’ll need to discuss the broker’s fee. Mr. Sorscher sent an invoice.”
Later that day, Daniel called Mr. Sorscher. “I know that you worked hard,” he said apologetically. “But I’m being relocated. Since I can’t take the place in the end, I assume I’m not obligated to pay the full fee.”
“No! The lease was signed,” Mr. Sorscher responded. “I completed my part. What happened afterward is not my issue.”
Daniel hesitated. “I’d like to do what’s right,” he said, “but I don’t want to pay what halacha doesn’t require.”
That evening, Daniel and Mr. Sorscher called Rabbi Dayan and asked:
“Is Mr. Sorscher entitled to his broker’s fee under these circumstances?”
“The rule of thumb, if not stated otherwise in the brokerage contract, is that a broker is entitled to his fee when the deal is finalized,” replied Rabbi Dayan. “Even if the parties later agree to dissolve the deal, the broker remains entitled to his fee.
“Regarding a shadchan, there are differing practices as to whether the obligation to pay attaches when the couple gets officially engaged (or signs the tena’im) or only when they get married (Rema 185:10; Aruch HaShulchan C.M. 185:11).
Regarding a sales agent or real estate broker, the defining point is usually when the parties make a binding commitment, because at that point, the broker has completed his service. Even if the parties subsequently agree to forgo the commitment, they cannot thereby revoke the agent’s right to his fee (Sha’ar Ephraim #150; Pischei Choshen, Sechirus 14:11).
Be’er Eisek (#48) addresses a drastic case in which one party passed away after signing a contract that included both rental of real estate and purchase of moveable property. He rules that regarding the real estate rental, which is finalized through the rental contract, the broker is entitled to his fee from the inheritors, whereas regarding the moveable property, which is not acquired through the contract without a valid kinyan, he is not.
Even so, it seems that this distinction only applies when there is a valid reason for breaking the contract. However, if one party retracts of his own volition after signing a contract for movable items, even at the cost of a penalty, he remains liable to the broker for concluding the contract, and the other party is liable in accordance with the amount of the penalty that he received (see Sma 185:26; Chikrei Lev #137; Aruch HaShulchan 185:11; Pischei Choshen, Sechirus 14:[16]).
Nonetheless, if a defect is discovered that voids the deal, the broker is not entitled to his fee (Pischei Choshen, Sechirus 14:[14]). Moreover, Aruch HaShulchan (185:13) suggests that if the sale was canceled due to changed circumstances that voided it, the broker is not entitled to his fee.
“Thus, in this case,” concluded Rabbi Dayan, “because the rental contract is binding, Mr. Sorscher is entitled to his fee, even if the parties have annulled the contract for valid reasons, unless changed circumstances voided the contract. The landlord can insist that Daniel cover the broker’s fee before releasing him from his commitment.”
Verdict: A broker is usually entitled to his fee when a binding commitment is made. Even if the parties later agree to dissolve the deal, the broker remains entitled to his fee, unless circumstances are such that the deal is voided due to a defect or changed circumstances.