A State Supreme Court judge ruled against residential broker Sloane Square NYC after the firm’s clients failed to close on two apartments at the Lucida condominium on the Upper East Side and the developer demanded a refund of the commission.
New York State Supreme Court Judge James Yates awarded a judgment in favor of Extell Development, which advanced half of the 3 percent commission payments up front and then demanded the money back after the buyers failed to close.
“Defendant was to receive a 3 percent commission for certain qualifying sales and defendant expressly acknowledged and agreed that it shall not be deemed to have earned a brokerage commission unless title closes and the agreed upon purchase price is paid or the prescribed consideration is delivered to or accepted by sponsor at closing,” Yates wrote in his Feb. 23 decision.
Extell President Gary Barnett said the decision was fair and reasonable given that the contract called for commissions to be paid for a completed sale.
“It kind of speaks for itself,” he told The Real Deal.
The Lucida, at 151 East 85th Street, is one of the highest profile condominium projects in Manhattan, competing against the Brompton, a high-profile condominium project from Related. About half of the units at the Lucida have closed and more than 80 percent are under contract, Barnett said.
The purchasers signed two separate agreements with Extell in May 2007 to buy unit 16J for $5.88 million and apartment 12A for $7.17 million. Extell paid the Sloane Square broker, who was not identified in the suit, two 1.5 percent advances, or about $195,745, when the contracts were signed and agreed to pay the remaining balance when the deal closed.
The buyers refused to close on their apartments, however, and the developer sent notices to the broker in June 2009 demanding a refund of the commission advances, according to court filings. The broker refused, arguing the firm was entitled to keep the advance commissions, which lawyers said modified the terms of the original agreements. The broker also argued that the original agreement was more than one year old and could not be enforced.
Jaar-mel Sloane, head of Sloane Square, and Katherine Harrison, the company’s attorney, declined to comment on the case.