Real Estate Commissions, Procuring Cause and the Push for Mandatory Written Buyer Agreements: Why NY Brokers Should Put it in Writing

Real estate commission disputes are among the most common and costly forms of real estate litigation in New York. They are also among the most preventable. The Capin & Associates, Inc. v. Herskovitz (1st Dept., 2021) [see https://bit.ly/4rhSdhD] case underscores a central reality that when the engagement terms are undocumented or vague, and a transaction later closes through another path, a broker’s commission claim will be difficult to establish.

Capin Case in a Nutshell:
Broken Causal Chain Defeats a Commission Claim

In Capin, the plaintiff broker sought compensation in connection with a multi‑building sale. There was no explicit written brokerage agreement. After the broker’s involvement ended, and after being informed that the properties were “no longer for sale,” another brokerage firm contacted the buyer, handled negotiations and due diligence and closed the deal. The court found that Capin was not the “procuring cause” of the transaction and affirmed dismissal of its implied contract claim.

Capin is a reminder that courts will not award a commission simply because a broker invested time or helped “open the door” and introduced a buyer to a seller. Absent clear exclusivity, the broker must prove a direct and causal connection to the consummated transaction.

The Basic New York Rules:
An Agreement, “Ready, Willing and Able,” and Procuring Cause

Commission entitlement in New York commonly revolves around three principles. First, there must be an enforceable basis for compensation. Ideally, a written contract is the best basis for entitlement to a commission on a real estate transaction. However, in certain circumstances when the facts show a meeting of the minds, an implied arrangement may establish a sufficient basis to support a commission claim in real estate transactions. Second, unless the broker holds an exclusive right, customarily through a written agreement, making causation irrelevant, the broker must establish it was the “procuring cause” of the completed transaction. Third, many decisions reiterate the traditional rule that a broker earns a commission when it produces a buyer who is “ready, willing and able” to purchase on the seller’s terms.

“Ready, willing and able” generally means the buyer is prepared to proceed on the seller’s terms and has the ability to do so, and many times can be established easily. “Procuring cause” is usually one of the more difficult elements to establish when there is no written agreement. Courts in the First Department have held that brokers must show a “direct and proximate link” between its efforts and the closing. Any breaks in the chain of causation (for example, time, intervening brokers, pauses in negotiations or independent re‑engagement) can defeat the claim.

These standards are rooted in long-standing New York commission jurisprudence. The 1881 case of Sibbald v. Bethlehem Iron Co. is frequently cited for the proposition that a broker is not entitled to compensation unless the broker is the “efficient procuring cause” of the bargain, and that a principal may, in good faith, terminate the broker’s agency before a deal is made. More recently, SPRE Realty, Ltd. v. Dienst (1st Dept., 2014) [see https://bit.ly/4bOMxGV] reaffirmed that the inquiry focuses on whether the broker’s efforts bear a direct and proximate link to the ultimate transaction, not whether the broker was merely involved at an earlier stage.

Statute of Frauds GOL § 5-701 and
Why a Written Agreement Still Matters

General Obligations Law (“GOL”) § 5‑701 [see https://bit.ly/4ky3qYC] (commonly referred to as the Statute of Frauds) generally requires that most agreements be in writing (with certain exceptions). One such exception is detailed in GOL, § 5‑701(a)(10) which provides that the writing requirement “…shall not apply to a contract to pay compensation to an auctioneer, an attorney at law, or a duly licensed real estate broker or real estate salesman.” The Capin case shows why this exception is not a guaranty of a successful commission claim. Even if an implied claim is legally available, the absence of a written agreement creates ambiguities about the scope, exclusivity, commission payment triggers, what happens if the client uses another broker, as well as other issues, and these ambiguities will undoubtedly create litigation risks when there is no written agreement.

Licensing: A Threshold Requirement (RPL § 442-d)

Real Property Law § 442‑d [see https://bit.ly/4rNxKRk] bars recovery of any real estate brokerage compensation if the claimant is not a duly licensed broker, associate broker or salesperson. In practice, a commission case can fail quickly if Section 442‑d is not satisfied, regardless of whether procuring cause is established or if a ready, willing and able purchaser was introduced to the seller.

According to Section 442-d, “No person, co-partnership, limited liability company or corporation shall bring or maintain an action in any court of this state for the recovery of compensation… without alleging and proving that such person was a duly licensed real estate broker or real estate salesperson on the date when the alleged cause of action arose.”

Recent Decisions: Causation and Contracts are Strictly Enforced

Other recent New York decisions continue to reinforce the same themes that drove the outcome in the Capin, such as clear contract mechanics and a provable causal relationship. In Macklowe Inv. Props. LLC v. MIP 57th Dev. Acquisition LLC (1st Dept., 2025) [see https://bit.ly/4rfMecS], the court addressed a commission claim where a letter agreement required execution of a separate commission agreement as a condition precedent to receiving any commission. However, because the condition was not satisfied, the claim failed, showing that even where a writing exists, it may not establish the underlying right to a commission if the broker does not comply with conditions contained in that previously executed agreement.

In Angelic Real Estate, LLC v. Aurora Props., LLC (2d Dept., 2025) [see https://bit.ly/4arSlUo], the court rejected a commission claim where the agreement did not clearly and unequivocally confer an exclusive right and the broker could not prove it was the “procuring cause” as required under common law. While this case involved a different context, the same principle applied: if exclusivity is not clear, causation will control.

Practical Business Case for Written Brokerage Agreements

Written brokerage agreements are risk-management tools. They prevent disputes about whether the broker was engaged at all, whether the engagement was exclusive, when and how the commission is earned, and how payment of compensation, if applicable, will be handled if the transaction is consummated through another channel or not at all.

While many real estate agents representing residential property sellers or landlords enter into exclusive agency and listing agreements providing clear parameters as to the payment of commissions, many commercial real estate brokers do not. It is recommended that all real estate brokerage firms, including commercial brokerages, enter into detailed agreements with their buyer/tenant or seller/landlord clients.

In 2026, buyer-side documentation is now especially important in light of the settlement in the Sitzer/Burnett v. National Association of REALTORS® case [see https://bit.ly/468YZxA]. Compensation expectations and the scope of services should be discussed at the very initial stages, before any showings, before any offer strategy is discussed, and before any of the common transaction’s pressure points. As required by the Sitzer/Burnett settlement, with regard to residential transactions, the compensation structure needs to be agreed to in advance, and in writing, by all parties and must be clear and conspicuous. It must also be clearly disclosed that all commissions are negotiable and there are no set commissions under the law or otherwise.

Proposed NY Legislation:
Written Buyer Representation Agreements

In addition to the requirements established by existing case law, the market and policy environment also continues to develop with a move toward mandatory written buyer representation agreements. In the 2025–2026 legislative session in New York, Assembly Bill A8910 [see https://bit.ly/3OIb1b6] was introduced proposing an amendment to the Real Property Law to require buyer-broker agreements for certain services and to mandate clear and conspicuous compensation disclosures. Additionally, Assembly Bill A5499 [see https://bit.ly/3Mvzgc2] similarly includes representation agreement requirements as part of broader brokerage and agency reforms. NYSAR has also publicly identified written buyer representation agreements as a legislative priority [see https://bit.ly/46A3ph6].

This legislative movement follows the national settlement in Sitzer/Burnett and related litigation, which resulted in significant changes to broker compensation practices, placing emphasis on written buyer representation agreements and transparent compensation disclosures nationwide. Although the Sitzer/Burnett litigation arose outside New York, its practical impact has influenced brokerage practices across the country, including in New York, where policymakers and industry leaders are evaluating statutory requirements to formalize written buyer and seller agreements and to clarify compensation structures.

If enacted, these proposals would formalize what many firms already view as best practice: have buyers (and sellers) sign a written agreement early, ensure that compensation is disclosed clearly, and establish detailed ground rules between the parties so that disputes and costly litigations can be avoided.

What to Include in a Commission Agreement

At a minimum, a strong seller or buyer agreement should address the scope of the representation (i.e., property, search area, and services). It should address whether the engagement is exclusive or non-exclusive and should be stated clearly. Of course, a clear recital of compensation and payment requirements must be included (i.e., the commission amount, who pays, when it is earned, and how shortfalls, if any, are handled).

A commission or representation agreement must also include provisions that clearly include the term (i.e., the duration) of the agreement, termination and expiration of the agreement, and any protection or holdover period, usually referred to as the “tail” period. Agreements may also contain language that protects a seller, such as “if, as, and when” language, in the event a transaction fails to close. For buyer agreements, clarity around compensation is essential. Now, particularly in light of Sitzer/Burnett, it is important that agreements detail whether a commission payment is expected from the seller/listing broker, directly from the buyer, or both.

Conclusion

The case law highlights the risks and issues that may arise without clear written terms and a provable causal chain. A claim for a commission can evaporate even where the broker invested real time and effort. With courts enforcing procuring cause and contract conditions strictly, and with the Sitzer/Burnett settlement and potential legislative initiatives moving toward mandatory written agreements, the safest approach is a written agreement which documents the engagement early, defines compensation clearly, and details the scope of the engagement concisely, ultimately preserving rights to commission in the event a dispute ever arises.

About the author: Legal Corner Column author John Dolgetta, Esq., is the principal of the law firm of Dolgetta Law, PLLC. For information about Dolgetta Law, PLLC and John Dolgetta, Esq., please visit http://www.dolgettalaw.com. The foregoing article is for informational purposes only and does not confer an attorney-client relationship and shall not be considered legal advice. The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the views or positions of HGAR, its affiliates, or any other entity.