Bell Nunnally Partner, Jeffrey Lowenstein, secured an appellate victory on behalf of Mikob Properties, ending a five and a half year legal battle. In the case Michael Neary et al v. Mikob Properties et al, the appellants sought to collect a real estate brokerage commission resulting from an $80 million real estate transaction. The trial court granted summary judgment in favor of Mikob Properties based on the statute of frauds provision of the Real Estate Licensing Act (RELA) and the 5th District Court of Appeals in Dallas, Texas recently affirmed the decision in a published opinion.
“We are pleased with the Court of Appeals’ decision as this was a long battle to free these properties from the specter of the lawsuit and to further clarify RELA, which will give real estate brokers guidance on how strictly the requirements of RELA are applied in Texas,” said Lowenstein, lead counsel for Mikob and chair of Bell Nunnally’s litigation section. “In addition, the end of this litigation will allow these apartment properties, which have been set up as Community Housing Development Organizations (“CHDO”), to pursue their goals of offering affordable housing for the Houston communities they serve.”
In December 2005, appellants Michael Neary and St. John's Holdings, Inc. brought suit to recover a brokerage fee in connection with the sale of eight apartment complexes. The transaction involved selling each of the properties to a CHDO with the intent of converting the properties into affordable housing for the Houston community. In the final purchase agreement, a provision awarding a real estate broker's fee was not included and the term sheet, which lays out the structure of the transaction, noted that the terms were non-binding. After the parties failed to agree on the terms for payment of a commission, the lawsuit was filed.
Justice Robert Fillmore states in the published opinion, “Because there was no contract meeting the requirements of RELA, summary judgment for appellees was proper. We affirm the trial court's judgment.” To comply with RELA, an agreement must be in writing and must be signed by the person to be charged with the commission, promise that a definite commission will be paid, or must refer to a written commission schedule and state the name of the broker to whom the commission is to be paid.
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