G. C. Fortune Mgmt. Co. v. Stockade Mobile Home Park
246 A.D.2d 739
FACTS
-1988: P contacts D (present and sole SH of mobile home park) asking if D would consider selling the park.
-D initially refuses, but ultimately expressed interest in having P manage, upgrade, and increase its occupancy.
-Fortune was an experienced manager of mobile home parks.
-Terms included that Fortune intended to charge and retain entrance fee ranging from $1,500 to $%k to mobile home dealers for placement of homes in the park.
-Feb. 24 1989, D enters into an agreement with P. Terms include that P was entitled to be "exclusive sales and rental agent" of D mobile home park, would increase the occupancy of the park to 98% by end of first 3 year term, and k would b renewable, at P's sole option, for 5 successive 3 year terms.
-Agreement provided that P retained 60-day right of first refusal to match any offer that was made to purchase the park or lease it for a term exceeding one year.
-P successfully managed park until March 1990.
-March 23 1990: P gets letter stating that since P was not a licensed real estate broker, the agreement was no good and cancelled.
-Dec. 4, 1990: D and another D, George Koshgarian, entered into lease agreement with purchase option for park which included idemnification agreement against any subsequent claim made by P.
-P claims breach of contract, D counterclaim for unpaid rents.
PROCEDURAL HISTORY
-Trial court dismisses on agreement being unenforceable due to illegality. P appeals.
ISSUE
Is a REAL ESTATE LICENSE required for a transaction in which the dominant or principal feature of the transaction was in the nature of a REAL ESTATE BROKER transaction?
HOLDING
Yes.
RULES
-A party who engages in the business of a real estate broker be duly licensed.
-Real Estate Broker: a person who, for a fee, commission or other valuable consideration, lists for sale … exchanges, buys or rents, or offers or attempts to negotiate a sale … exchange, purchase or rental of an estate or interest in real estate, or collects or offers or attempts to collect rent for the use of real estate"
-Statute must be strictly construed and not made applicable 'to cover every transaction in which an interest in real estate may be part of the subject of transfer.'
ANALYSIS
-Court looks to the agreement itself, agreement provides that P was not to be considered an agent of D.
-Nature of the Transaction: Dominant or principal feature of transaction was in the nature of a REAL ESTATE BROKER. A license would be REQUIRED.
-P did not have a license.
CONCLUSION
-Trial court holding affirmed. Contract unenforceable due to illegality.
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246 A.D.2d 739
FACTS
-1988: P contacts D (present and sole SH of mobile home park) asking if D would consider selling the park.
-D initially refuses, but ultimately expressed interest in having P manage, upgrade, and increase its occupancy.
-Fortune was an experienced manager of mobile home parks.
-Terms included that Fortune intended to charge and retain entrance fee ranging from $1,500 to $%k to mobile home dealers for placement of homes in the park.
-Feb. 24 1989, D enters into an agreement with P. Terms include that P was entitled to be "exclusive sales and rental agent" of D mobile home park, would increase the occupancy of the park to 98% by end of first 3 year term, and k would b renewable, at P's sole option, for 5 successive 3 year terms.
-Agreement provided that P retained 60-day right of first refusal to match any offer that was made to purchase the park or lease it for a term exceeding one year.
-P successfully managed park until March 1990.
-March 23 1990: P gets letter stating that since P was not a licensed real estate broker, the agreement was no good and cancelled.
-Dec. 4, 1990: D and another D, George Koshgarian, entered into lease agreement with purchase option for park which included idemnification agreement against any subsequent claim made by P.
-P claims breach of contract, D counterclaim for unpaid rents.
PROCEDURAL HISTORY
-Trial court dismisses on agreement being unenforceable due to illegality. P appeals.
ISSUE
Is a REAL ESTATE LICENSE required for a transaction in which the dominant or principal feature of the transaction was in the nature of a REAL ESTATE BROKER transaction?
HOLDING
Yes.
RULES
-A party who engages in the business of a real estate broker be duly licensed.
-Real Estate Broker: a person who, for a fee, commission or other valuable consideration, lists for sale … exchanges, buys or rents, or offers or attempts to negotiate a sale … exchange, purchase or rental of an estate or interest in real estate, or collects or offers or attempts to collect rent for the use of real estate"
-Statute must be strictly construed and not made applicable 'to cover every transaction in which an interest in real estate may be part of the subject of transfer.'
ANALYSIS
-Court looks to the agreement itself, agreement provides that P was not to be considered an agent of D.
-Nature of the Transaction: Dominant or principal feature of transaction was in the nature of a REAL ESTATE BROKER. A license would be REQUIRED.
-P did not have a license.
CONCLUSION
-Trial court holding affirmed. Contract unenforceable due to illegality.
---
Interested in learning how to get the top grades in your law school classes? Want to learn how to study smarter than your competition? Interested in transferring to a high ranked school?
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