Brokerage fees as the difference between two amounts
- Buying an apartment in Israel
- The real estate broker
We explained that the background to the enactment of the Agent Law is, among other things, to protect the customers, and we also explained that, in principle, the Agent Law is mandatory and that large parts of it cannot be conditioned.
And now we’re going to as if this matter is absolute:
This matter has not yet been decided and remains in need of review.
No binding decision has yet been made in the event of the client’s obligation to pay the brokerage fee even if the parties have signed an agreement that does not meet the conditions required by the Agent Law.
Other rulings state that various clauses in the Agent Law, or even the entire law, are mandatory.
Reuven wants to sell an apartment for 1million NIS Simon, the realtor, comes to him with a creative offer:
“I will find you a buyer, and you will pay me the difference of the amount, which is over NIS 1 million”.
On the face of it, however problematic and dishonest, according to what I wrote about “freedom of contracts,” such an agreement is valid.
However, it seems that the duty of disclosure that applies to parties to the negotiations does not take place here since this duty is not only to refrain from providing false statements and false information but also a positive obligation.
In such a case, it can be argued that the violation of the obligation to act in an acceptable and good faith way can be worn by the omission or non-disclosure of facts when under the circumstances there was room to expect the person negotiating to discover them to the other side.
Proper etiquette is not only silence and avoidance of lying.
A brokerage fee beyond ‘acceptable’ may be considered a ‘personal matter’ under Section 11 of the Realtors Law.
The realization of the agent’s duty of good faith in the existence of a brokerage agreement means, among other things, that the agent on behalf of the seller will not pocket a portion of the property benefit paid by the buyer for the seller without informing the seller.
It can also be added that such transactions also have problems on the property tax authorities, from the exposure to the seller’s tax and even of the buyer.