Gary Barnett’s Extell Development must pay $1.32 million to broker Georgia Malone after battling with her for nearly a year over how much commission she deserved on a multifamily building portfolio sale, court records disclosed today show.
The order came down Nov. 1 from state Supreme Court Justice Joan Kenney, who settled on a 2 percent commission for Malone on Extell’s $66 million sale of the Westbourne, a complex of five apartment buildings — at 601, 605, 607, 609 and 611 West 137th Street in Hamilton Heights. The judge also directed the developer to pay interest from the closing date of Dec. 20, 2012.
Malone sued Extell on Dec. 17, 2012, after she claims the company told her it would pay a commission below the “standard and customary commission” that they had agreed to. Extell ultimately offered her $400,000, less than a third of her invoice for $1.32 million. The buyer, an affiliate of Midtown-based Bonjour Capital, was not a party to the litigation.
Extell declined to comment on the litigation, but had responded to the lawsuit in January by stating that it “Promptly rejected said ‘invoice’ as absurd.” In a statement today, an Extell spokesperson told The Real Deal: “We believe the decision is wrong and we will appeal.”
Malone, who runs her eponymous brokerage firm based in Midtown, alleged she and Extell had a verbal agreement on the commission; neither side produced documentation enumerating the figure that they settled on.
In her complaint, Malone stated that Extell told her that the deal was “so ‘thin,’ that there will be insufficient funds at closing to pay [Malone] the [full] brokerage commission.”
An expert witness who testified on behalf of Malone told the court that the commission should be 2 percent for a sale so big and so complicated.
Real estate insiders told TRD that a commission for a deal of that size would typically range from about 0.75 percent to 2 percent.
However, one broker who was not involved in the dispute, said 2 percent was high for a deal of this size.
“A typical commission in multimillion dollar transactions — say north of $50 million — can range between 1 percent to 1.5 percent,” Amit Doshi, executive director at Besen & Associates, said.
“Very rarely have I seen higher unless there is a co-broker or the broker has achieved an exceptional price. Conversely I have been paid less then 1% in larger transactions,” he said.
The 2 percent figure was “based on the amount of work that was done to bring the parties together,” Malone’s attorney, Claude Castro, told TRD.
Correction: An earlier version of this article incorrectly wrote Amit Doshi’s name.