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Samuel-II
Samuel-II, Lawyer
Category: Real Estate Law
Satisfied Customers: 27009
Experience:  real estate law
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I'm hoping you might be able to help me with my real estate

Customer Question

Hi - I'm hoping you might be able to help me with my real estate question. My New York City free-market apartment rental lease is ending, and I want to put 2 interested renters directly in touch with my landlord. If one of my contacts sucessfully enters into a lease for this apartment, both contacts have told me they wish to pay me a finder's fee (but one that would presumably cost less than they would otherwise pay a broker to help them find another apartment). I would note that I would not have the power to negotiate the lease or vet the transaction (this would entirely be up to the prospect and the landlord/management company) and all I would do is introduce them to my landlord and maybe give them access to see my apartment. I would add that the landlord would not have an agent/broker involved on their end as well. My question therefore, is it legal for me to be paid a finders fee should my introductions result in a successful lease being signed? (I am not an agent or broker)...I also found the below clarification online if the below is helpful:
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Because real estate licensing board cannot regulate non-licensed individuals entering into private agreements for finding real estate opportunities provided the agreement does not cross the line into brokerage services.
“The written agreement between the parties, and drafted by Defendant, explicitly refers to Plaintiff being compensated in the role of a finder. There is nothing in the agreement explicit or implied that Futersak was an agent of Defendants in the actual or functional meaning of that term and relationship. Futersak had no explicit or implied power to bind Defendants. He did not have the power to negotiate the transaction. Futersak did not have the power to do anything except find and introduce prospects.”
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Samuel-II replied 1 year ago.

Hello

This is Samuel and I will discuss this and provide you information in this regard.

You can make the arrangement. I suggest you do not want to refer to it as a "finder's fee." And in that regard, even with a written agreement it would he hard to enforce. But you can do it and if the person doesn't pay you, that is all there is. You would not have a recourse to go to court.

Expert:  Samuel-II replied 1 year ago.

But maybe your friend will uphold the agreement.

Customer: replied 1 year ago.
I need to know if what I want to do is legal? If it's not enforceable in court then I am assuming it's not legal, please advise.
Expert:  Samuel-II replied 1 year ago.

It is legal for you to tell your friends that you will want a fee to give them a contact for the LL. But you cannot charge a Finding fee, per se. It would not be enforceable because you do not have the license to charge a finding fee. So you would simply need to make it an agreement that the friend will pay you for the introduction. No negotiating.

Expert:  Samuel-II replied 1 year ago.

Let me try another way

Expert:  Samuel-II replied 1 year ago.

When folks pay a broker a Finder's fee they should also get a host of services such as

Showing you apartments is a big part of the service you'll get. But a good broker will also:

  • Gauge your priorities and tactfully discover what you're willing to forgo
  • Educate you (and your guarantor, if necessary) about neighborhoods, market trends, potential trade-offs, and what to expect from the rental process
  • Help you stand out from other applicants
  • Communicate regularly and meaningfully
  • Share insider knowledge on which buildings and blocks to avoid, which apartments look nice but would be nightmarish to live in, listings that haven't yet hit the market, and potential deals
  • Represent your interests with the landlord, including actively negotiating rents, lease terms, move-in dates, and exceptions to rules (such as pet weight limits).

Expert:  Samuel-II replied 1 year ago.

You are not going to do any of that. Therefore it is not illegal for you to say to a friend, I will give you my LL's contact but I want $100 for it.

Expert:  Samuel-II replied 1 year ago.

In other words, you really shouldn't do any introductions. It is a fine line. Because you can tell your LL that you have a friend interested and can you give the friend the LL's contact? But you should not do anymore than that.

Customer: replied 1 year ago.
My issue is that my contact will not pay me unless they end up successfully renting my apartment through my introduction. (So it's different than me receiving a fee to make an introduction, but rather that it's based on them successfully renting the apartment)....and also having me show them my apartment just to view it...
Expert:  Samuel-II replied 1 year ago.

I understand. SO if you were going to have a written contract what would it say you are getting paid for? Upon a successful rental of...?

Expert:  Samuel-II replied 1 year ago.

I suggest you still would not be able to enforce it without having information about the introductions brought into evidence. I mean why would someone pay someone just because the rented an apartment. The friend will need to be honest and you need to trust they will pay you. If they don't then you have no recourse.

Customer: replied 1 year ago.
Thanks. This person is willing to pay quite a large amount to me (if they are successful in renting the apartment) because brokers in New York City charge 15% of annual rents. It is a way for them to circumvent having to use a broker so yes the agreement would say if they rent x apartment through my introduction I will earn y, ....which sounds like is not legal nor enforceable in court, is that right? Though they may still pay me. I don't want to be involved with anything where I can't have an enforceable agreement in court, because I don't really know this person...
Expert:  Samuel-II replied 1 year ago.

I suggest that is correct. It would not be enforceable.

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