The Law

Finders Keepers…Finally by Ron Davis The real estate broker who steered a retail client to a receptive Iowa shopping center will finally collect a brokerage fee for his services. Obtaining that fee has been difficult, however. That’s because the shopping center—The Shoppes at Three Fountains, in West Des Moines—is owned in part by a brokerage firm, and that firm objected to payment of the fee to the finder broker. The objection resulted from a dispute over the agreement between the two brokers. The retail client, on his broker’s suggestion, had met with the shopping center’s broker to determine if the center’s owners would be interested in leasing space there. Based on that meeting, a lease agreement seemed imminent, and the retailer’s broker contacted the center’s brokerage firm to discuss payment of a brokerage commission. In response, the shopping center’s brokerage firm simply outlined in a letter its policy on payment of commissions. The retailer and the shopping center eventually signed a lease. But when the retailer’s broker requested his commission, the shopping center refused to pay, claiming that the agreement between the two brokers did not comply with standard professional regulations. Specifically, the center’s brokerage firm pointed out that Iowa Real Estate Commission rules require that a contract between a broker and a third party (a lessor or a buyer, for example) include a definite expiration date. Apparently, no expiration date was included in the agreement between the two brokerage firms. The dispute resulted in a lawsuit, and an Iowa jury decided that the center’s brokerage firm must pay the finder broker a $69,000 commission. The shopping center and its brokerage firm appealed. The Iowa Supreme Court upheld the jury verdict, explaining, “The primary purpose of the rule [of the Iowa Real Estate Commission] in question is to prevent an owner’s land from stagnating on the market for in indefinite period of time in the hands of a single broker. This requirement serves to protect property owners, however, and has no similar application to agreements between brokers, as in this instance. (Hubbell Comm. Brokers v. Fountain Three, 652 N.W.2d 151 [Iowa 2002]) Decision: October 2002 Published: December 2002