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Broker Unable to Double Dip
A commercial broker who entered into fee
agreements with both a landlord and a tenant who wanted to find a
replacement tenant was limited to just one commission.
As a result of a merger, Landry's Seafood Restaurants, Inc., became
the tenant under a lease for property in Prince George's County it
chose not to occupy. The Fischer Organization, Inc., a real estate
brokerage firm, offered to assist it in finding a replacement tenant
for a brokerage fee equal to 4% of the aggregate value of the entire
lease term of any lease acceptable to Landry's. At the same time, the
broker entered into an agreement with the landlord for a 4% commission
for procuring any lease.
Fischer located a replacement tenant
that entered into a lease arrangement with the landlord on terms that
were not as favorable to the landlord as the prior lease would have
been. The landlord paid the broker a 4% commission.
Landry's did not agree to the terms of
the lease with the replacement tenant, and refused the broker's demand
that it also pay a 4% brokerage fee. The landlord sued Landry's for
damages caused by its premature termination of the Landry's lease,
including the brokerage fee paid by the landlord.
The trial court held that the lease was
not acceptable to Landry's, and consequently, no commission was due
from Landry's. The trial court viewed the two brokerage agreements as
alternatives with the intent being that Landry's would pay the 4% fee
if the transaction ended up being an assignment or sublease, but the
landlord would pay the fee if the transaction was structured as a new
lease. On appeal, the Court of Special Appeals affirmed the trial
court's ruling.
The Fischer Organization, Inc. v.
Landry's Seafood Restaurants, Inc., ___ Md. App. ____ , 2002 WL
313535, No. 181, September Term, 2001, decided March 1, 2002.
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