The Unlicensed Real Estate Broker in New York: Beware

The U.S. District Court for the Northern District of New York recently determined that because New York prohibits unlicensed real estate brokers from pursuing payment in its courts for services rendered, a plaintiff who performed real estate work for a client who then did not pay had no standing to sue. In addition, the plaintiff was not able to use the doctrine of quantum meruit to make an end-run around the state's prohibition on its courts' providing assistance to unlicensed real estate brokers. Howard Carr Cos. v. Cumberland Farms, 2019 U.S. Dist. LEXIS 24895. The case highlights the pitfalls of attempting to broker a commercial real estate deal without an official license from the state. When things don't work out just as agreed, the “broker” will often be left without recourse against a client who has made different plans.

Cut Out of a Deal?

Plaintiff Howard Carr Companies, Inc. (“the Howard Group” or “plaintiff”) is a commercial real estate broker in Albany, NY. It is not licensed as such in the State of New York, however. In June of 2013 the plaintiff entered into an agreement with defendant convenience store chain Cumberland Farms, Inc., and defendant commercial real estate developer First Hartford. The Howard Group agreed to scout out potential locations for development of future Cumberland Farms outposts. This it did, according to its complaint, by finding 126 potential locations that satisfied the defendants' stated criteria. The defendants then opened or made plans to open Cumberland Farms operations in at least ten of the 126 locations identified by the Howard Group, the plaintiff claimed. However, the plaintiff received none of the approximate $1 million it thought it was owed for its efforts on behalf of the defendants.