Broker Not Entitled to Commission for Lease Assignment

May 31, 2002

A shopping center tenant sublet all but 5,200 square feet of its space to a movie theater. The tenant then signed an agreement with a broker in which the broker agreed to find a subtenant for the remaining space. Under the agreement, the broker would get a commission if the space was sublet or the underlying lease was canceled. The tenant later assigned its lease to the center's owner. The broker requested its commission, but the tenant refused. So the broker sued the tenant for violating their agreement.

A shopping center tenant sublet all but 5,200 square feet of its space to a movie theater. The tenant then signed an agreement with a broker in which the broker agreed to find a subtenant for the remaining space. Under the agreement, the broker would get a commission if the space was sublet or the underlying lease was canceled. The tenant later assigned its lease to the center's owner. The broker requested its commission, but the tenant refused. So the broker sued the tenant for violating their agreement.

A Michigan appeals court ruled that the broker wasn't entitled to a commission under the agreement's terms. The underlying lease was assigned, not canceled. Since the agreement didn't include assignment as a “commissionable event,” the broker wasn't entitled to a commission, the court said [Schostak Bros. & Co. v. Durant Enterprises].

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