No Broker's Commission Due from Owner Because Lease Was Cancelled

A lease required the owner to pay the tenant's broker a commission when the owner and tenant signed the lease. But the lease also said that if the space wasn't delivered by a set date, the tenant could cancel the lease and the parties would be discharged from all lease obligations. The parties signed the lease, but the owner didn't pay the broker's commission. The tenant later cancelled the lease. The broker sued the owner for the broker's commission. The owner argued that it was relieved from having to pay the broker's commission when the lease was cancelled.

A California appeals court dismissed the broker's lawsuit and ruled that the owner wasn't required to pay the broker's commission. The court noted that the lease's terms would determine whether the broker was entitled to the commission because the broker and owner hadn't signed a separate agreement with each other. Here, the lease specifically included a clause designed to relieve the owner of all lease obligations—including the obligation to pay the broker's commission—if the lease were cancelled, noted the court. Because the tenant ultimately cancelled the lease, the broker lost its right to a commission from the owner [Cornish & Carey Commercial v. Guzik].