Court Dismisses Claim Seeking Unpaid “Transaction Fees” Where Plaintiffs Were Unregistered Real Estate Brokers

Posted: November 24, 2025 / Written by: Jeffrey M. Eilender, Joshua Wurtzel, Channing J. Turner, Samuel L. Butt, Thomas A. Kissane / Category Fees

Court Dismisses Claim Seeking Unpaid “Transaction Fees” Where Plaintiffs Were Unregistered Real Estate Brokers

On October 3, 2025, Justice Melissa A. Crane granted in part defendants’ motion for summary judgment after concluding that, because plaintiffs had not registered as real estate brokers, they could not seek certain fees or commissions for their work on a real estate portfolio. In CSG Re Partners, LLC, et al., v. Ian Behar, et al., Index No. 653469/2025, a written memorandum of understanding (MOA) between several “investors” governed the management and financing of a complicated portfolio of real property. The agreement provided for various incentive, financing, and transaction fees to the investor/brokers. The Court ruled that at least some of these fees violated New York Real Property Law (RLP) § 442-d by giving fees to unlicensed brokers, explaining:

Unlike the Incentive Fee, the MOA ties the “Transaction Fees” to the purchase of the properties. The MOA tasks CSG with the responsibility to source the properties and raise financing. Plaintiff did, in fact, introduce the Fountains property to defendants (see EDOC142). Even the title “Transaction Fees” suggests a tie to the transfer of real estate. Thus, the MOA makes clear the “Transaction Fees” are to compensate CSG for facilitating the purchase of real estate and negotiating the financing attendant thereto. As it is undisputed that CSG did not have a license, RPL § 442-d precludes recovery for the “Transaction Fees.” . . . However, that the parties culled out and separately bargained for “Transaction Fees” to compensate plaintiff for sourcing and helping to acquire the properties, supports that the aforementioned “Incentive Fee” was for different services. If CSG’s services were only for acquiring the property or only for consulting and management, there would be no need for separate fee provisions.

The attorneys at Schlam Stone & Dolan have extensive experience with litigation involving real estate financing and sales. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.