• Question: [Wednesday, 11^th Sivan 5783]

For several weeks we have been looking into leasing a certain apartment through a Frum broker and finally agreed to go through with the rental, sending the broker a message that we have decided to rent the apartment. He told us he would bring the contract the next day for us to sign. In the meantime, Mamash with Hashgacha Pratis, we discovered another apartment that same day which meets our standards much more than the current apartment that we had already decided to sign on, so in the end we canceled the oral agreement and told the broker that we are no longer interested in signing on the apartment. He was quite upset as he worked with us for several weeks regarding this apartment exhausting much time and his own money, and he mentioned about paying him a brokers free being that we were ready to sign and it’s not his fault that we suddenly decided to back out and that it explicitly states this in the brokerage agreement. The broker’s fee is not cheap and includes one month of rent plus taxes. We also never signed any agreement with the broker regarding his fee and he told us that he would bring the brokerage agreement to sign together with the contract for the apartment. So in the end, we never signed either on the apartment nor on the brokerage contract so I believe he is asking for money that he does not deserve. I told him I would speak with a Rav, and he agreed. What do you say?

Answer:              

You are exempt from paying any amount to the broker, being that you had yet to sign the rental agreement and have never signed a brokerage agreement which dictates anything to the contrary. Nonetheless, if you want to do an act of Chesed to compensate him for the amount of time he spent with you and perhaps money he spent driving etc., and you feel bad that you backed out in the last minute, then you may do so purely voluntarily and not as an obligation, giving him whatever amount you feel you can afford or want to give.

Explanation:

The concept of paying a brokers fee while not explicitly recorded in the Talmud [which does not make mention of the concept of a broker but rather of a Sarsur who serves as an agent hired by a specific party], is recorded in the Rishonim and Poskim, and brought in Shulchan Aruch and had certainly has Halachic validity and liability. The basis for this liability is due to the custom to collect a fee for a brokers work which would hence make the recipient liable for payment due to the law of “Yored Lisidei Chaveiro” or due to the broker being considered a hired worker. In other words, once the custom became for a broker to collect payment for his work, as is evident to have occurred in the times of the Rishonim, then this liability for payment becomes law despite it not having any explicit Talmudic basis. Likewise, from a Torah perspective [as opposed to secular law], the liability for payment applies even if a brokers agreement contract was not signed by the client with the broker. The mere fact that he agreed to receive the services of the broker makes him liable to pay the brokerage fee. However, being that according to secular law in all countries that I am aware, the law is that the client is not obligated to pay a brokerage fee to a real estate broker unless a contract which details the fee was signed with the broker, therefore the same may now apply regarding Torah law, as this secular law is the new custom and hence can replace the old custom to require payment even if a contract is not signed. [In other words, since this entire concept of the brokerage fee is based on custom, and not a unique Talmudic ruling, therefore its liability also sways according to the custom of the world and hence the secular law can have an effect on the Torah law in this matter.] Now, although Batei Dinim are accustomed even today to require the client to pay at least some and sometimes all of the brokerage fee even if a contract was not signed [this depends amongst other factors also on the country or community of the people involved and whether or not the secular law which requires a signed contract has become adapted in their community], nonetheless, in our scenario the client is exempt from paying any of the brokerage fee for the following simple reason: A brokerage fee is only obligated to be paid if the broker brought the transaction to its final stage of completion as accepted in the brokerage world. Thus, regarding a real estate broker, he is not considered to have finished his job unless you actually sign on the apartment which represents the end of his work in the transaction, and finalizes your liability of payment to him for his services. [Once you sign the rental agreement, you are obligated to pay a brokerage fee even if you later back out of the rental, and even if it is with the agreement of the landlord, nonetheless the broker does not lose out from his fee. The only case of exception to this rule would be if the cancellation of the argument was due to misinformation to the level of a Mekach Taus in the rental agreement, which would deem the rental agreement as void and hence retroactively cancel the fee requirement to the broker.]

Accordingly, since you did not yet sign the rental agreement therefore you are completely exempt from paying any amount to the broker. As unfortunate as this is for the broker in having lost his client at the last minute and having all of his hours go to waste, he still cannot override the Torah and secular law which governs the terms of payment for brokerage services. In the future, the broker should have his clients sign on the brokerage agreement early on and not wait for the last second, if his fees and/or conditions are different than the standard norm for brokers.

Sources: See Hayashar Vehatov 5 p. 19 [Rav M.M. Shpern] in great length; Chukei Chaim [Freidman] Tivuch See regarding that there is no need to pay broker’s fee if a cancellation occurs prior to the deal being closed: Rama C.M. 185:10; Or Zarua 3:257; Terumas Hadeshen; Shaar Efraim 185:50; Aruch Hashulchan C.M. 185:11; See regarding no need to pay broker’s fee unless the lease agreement was signed: Hayashar Vehatov 5 p. 36; Chukei Chaim 1:26 footnote 13 and ; 3:2; Chavos Yair 154;  See regarding the halachic requirement to pay for the fee even if a brokerage agreement was not signed: Rama 185:6 regarding a Sarsur; Gr”a C.M. 185:13