Hilchos Choshen Mishpat

Volume I : Number 8
When An Agent Is Not An Agent

Question:

A real estate agency advertised that there was a certain home for sale in a specific neighborhood, near a certain supermarket. Reuven (not his real name) decided to search that neighborhood and approach the owner directly, bypassing the real estate agent. He found that home and purchased it.
Does the agent have a Halachic right to demand his fees (completely or partially), since it is clear that if not for his listing Reuven would not have purchased this house?

What if a real estate agent met Reuven on the street, and mentioned that he had a house for him to look at, but Reuven was not interested. Shimon, who overhead their conversation, went and purchased that home for himself. Does Shimon have to pay the agent his fees?

An agent met a friend at a wedding. In the course of their friendly conversation, the topic of his work came up and, by the way, he also mentioned that he had received a new listing in a certain neighborhood just that day. The following day, his friend went and bought that home for himself. Does he owe the agent his fees?

A homeowner listed his house with a certain real estate agent. A week later, the agent's son became engaged, and the agent and the future bride's father decided to jointly purchase this home for the young couple. The agent feels that he is entitled to his fees. His position is that since the homeowner signed a contract obligating himself to pay for any sale that comes through the agent, what difference does it make if the buyer is the agent himself or anyone else?

What is the Halacha?

Answer:
In all of the above cases, the agent does not collect his fee, and is not considered to be the agent at all. However, it must be mentioned that in Question B, Shimon (the buyer) acted improperly and unfairly.

Sources:

There is an important distinction that must be drawn between payment to an agent, and payment for use of information protected by a patent or copyright. When information is "owned" by an inventor or a copyright holder, the payment is not for work done for you, rather you are purchasing the information itself. The information in owned by someone, and can be purchased from the owner just as merchandise can be purchased from it's owner.

Agency, however, is considered a service done by someone for you, i.e. the connection of buyer and seller (or any other connection, such as finding someone a Shidduch). This service qualifies as work done for one person by another, not as a sale of information. This is true even though no physical labor is being done for you. It can be compared to a payment to a psychologist or lawyer for advice - you are paying for the service rendered, you are not "purchasing" the information that he or she has passed on to you.

Therefore, in Question A, since the agent did not talk to the buyer and did not pass any information along to him directly, he did not personally do any work for him, and can not claim wages for a service rendered. This would be true even if the listing had contained the exact address. Just as the newspaper can't claim to be deserving of any fees for publicizing this information, the agent also has no right to claim that he has done a service for the buyer by publicizing the information.

In relation to Question B, there too, since the agent did not personally speak to the buyer, no service was provided by him for the buyer. The agent's fees are for an actual service provided by him for both sides, and not payment for exclusive information owned by him.

In relation to Question C, although the agent _did_ speak to the buyer at the wedding, he admits that he didn't do so in the context of providing a service for his friend. He was just making friendly conversation. There is no obligation to pay wages for friendly conversation.

In relation to Question D, the definition of an "agent" is someone who connects two people who would otherwise be strangers. If the agent is either the buyer or seller, his classification is "Baal Dovor" (involved party), not an agent. The seller is obligated to pay Reuven the agent, not Reuven the Baal Dovor who is taking care of his own personal needs.

PLEASE NOTE: As we noted in last week's listing, these classes are based on actual cases presented to a Bais Din in Israel. In Israel the process of selling a home has much less formality than in other parts of the world. For example, it is common to list an apartment for sale with more than one agent, and then end up selling it yourself through a sign posted at your local bus stop! Additionally, it is customary in Israel for the buyer to pay a commission to the broker, whereas in other countries the norm may be that the seller exclusively pays the broker.

However, where an exclusive agreement has been entered between homeowner and agent to list a certain home, it is clearly illegal and prohibited Halachically for the homeowner to bypass the real estate agent in any way. The purpose of this class is to point out that even in such a situation, the agent does not "own" the information regarding this home, he is merely a provider of brokerage services to all parties involved.

This class is translated and moderated by Rabbi Aaron Tendler of Yeshivas Ner Yisroel in Baltimore. Rabbi Tendler accepts full responsibility for the accuracy of the translation and will be happy to fax originals of the articles in Hebrew to anyone interested.

Feedback is appreciated! It can be sent to atendler@torah.org.

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Please Note: The purpose of this column is to make people aware of Choshen Mishpat situations that can arise at any time, and the Halachic concepts that may be used to resolve them. Each individual situation must be resolved by an objective, competent Bais Din (or Rabbinic Arbitrator) in the presence of all parties involved!