Purchaser of Commercial Property Found to be Liable for Payment of a Broker's Commissions Where the Purchaser Obtained the Seller's Interests Under a General Assignment of Leases and Rents

In a recent decision, the New Jersey Supreme Court held that the purchaser of a commercial property may be liable for the payment of a broker’s commission which was due under leases assumed by the purchaser pursuant to a general assignment executed at closing. 

In Pagano Company v. 48 South Franklin Turnpike  (decided March 9, 2009), the Court applied its prior holding in VRG Corp. v. GKN Realty Corp., 135 N.J. 539 (1994) which held that to incur liability by virtue of an assignment the purchaser must have “affirmatively assumed” the seller’s obligations to pay the commissions, to require that a purchaser honor a commission agreement even without a separate, express agreement to pay such commissions. 

The leases at issue were executed with the Seller due to the Plaintiff's brokerage efforts.  Because each of the leases included a provision that in the event of the sale of the building the purchaser would assume and carry out all of the covenants and obligations of the landlord, the Court agreed with the trial court's reasoning the purchaser had affirmatively assumed the obligation to pay the Plaintiff's commissions.

 

The decision can be viewed by clicking on the following link:

lawlibrary.rutgers.edu/decisions/supreme/a-9-08.opn.html