According to the Law of Realtors, a realtor is entitled to a fee when an agreement is drawn up in writing for realty services that includes, among other things, the details of the realtor, the name of the seller, a description of the property and the asking price. The realtor needs to be the effective and active factor in closing the deal. The realtor’s fee is due the realtor when a binding agreement is signed; such an agreement can be a sales agreement and even a protocol. An additional issue that comes up in this connection is whether to give the realtor exclusive rights. The meaning of this is that within a time frame for the exclusivity that has been agreed upon, the realtor has a right to collect his fee even in the instance where the seller sold the apartment to a buyer who was referred to him not by the realtor — through a newspaper advertisement, through friends, through acquaintances or any other way. The law provides that during the exclusivity period the realtor must make additional marketing efforts in addition to the usual realty work, such as: placing a sign on the property, advertising to a specific consumer group, advertising in a daily newspaper or a local news sheet, inviting potential buyers to come to the property on a specific day – open house, direct mailings, presentation on the Internet and more. There are many instances in which the seller shows the apartment to a specific buyer before the period of exclusivity, but the signing of the contract takes place within the period of exclusivity. In this case also, the realtor, with whom the seller signed an exclusivity agreement, is entitled to a realtor’s fee. This issue has even come before the Supreme Court after a buyer was sued by a realtor, when he refused to pay the realtor’s fee for the period of exclusivity. In that instance the buyer claimed that another realtor had been the one who had been instrumental and active in the deal and therefore the realtor’s fee should be due him, and it was to that realtor that the buyer had paid the realtor’s fee. The realtor with whom the buyer signed the exclusivity agreement sued the buyer for the realtor’s fee. The Regional Magistrates Court, and even the Supreme Court, required the buyer to pay half the realtor’s fee to the realtor who had the exclusivity, in as much as the agreement was reached during the period of exclusivity. Why only half? This was because the realtor was the one who prepared the protocol, which constitutes a legal action, and according to the Law of Realtors when a realtor takes legal steps he is night entitled to a realtor’s fee. What is the solution? It depends on what one wishes to achieve — when we are at the starting point, one can give exclusivity if the seller is not interested in dealing with potential buyer visits and does not intend to try to find a buyer by himself. If we have shown the apartment ourselves, the exclusivity can be limited to new clients only. Another possibility is to give the property to the realtor for straight marketing — the realtor will be the only realtor for the apartment, however, if the seller finds a buyer by himself, he will not be required to pay the realtor’s fee.

Dror Cohen-Orgad Adv & Notary. English speaking advocate and notary.  Office situated in Country Centre, Ginat Hahula 76/212 Modiin. E-mail: dcor@012.net.il  Tel: 08-9708471