The Connecticut Appellate Court has ruled against New Capital Solutions, LLC, a brokerage firm, in a dispute involving a breach of contract claim against KOSL Properties, LLC. The court's decision, released on June 23, 2026, determined that New York law applies to the case and that the plaintiff was barred from recovering fees due to not holding a valid real estate broker license in New York.
This ruling affects New Capital Solutions, which operates out of Connecticut but was seeking compensation for services rendered in New York. The court's decision underscores the importance of licensing in real estate transactions and clarifies the legal landscape for brokerage firms operating across state lines.
Background
The case arose from a contract between New Capital Solutions and KOSL Properties, a New York limited liability company. The agreement, executed on July 15, 2019, required New Capital Solutions to find a lender willing to provide a loan to KOSL, secured by real property in New York. KOSL paid an initial fee of $5,000 to New Capital Solutions for its services, which were to include negotiating the loan.
After efforts to secure financing, KOSL ultimately closed a loan with M&T Bank, but the brokerage fees were not paid. New Capital Solutions filed a lawsuit in June 2020, claiming breach of contract and seeking the unpaid origination fee. The defendants countered with defenses, including that New Capital Solutions was not licensed as a real estate broker in New York, as required by New York Real Property Law § 442-d.
The Ruling
The Connecticut Appellate Court, led by Judge Clark and joined by Judges Westbrook and Flynn, affirmed the trial court's judgment in favor of KOSL Properties. The court ruled that New York law, specifically § 442-d, barred New Capital Solutions from recovering any fees. The court stated, "The trial court properly determined that New York Real Property Law § 442-d barred the plaintiff’s claims, as there was no dispute that the plaintiff did not hold a New York real estate broker license."
The court found that the plaintiff had sufficient notice of the choice of law issue, despite the defendants not initially raising it in their pleadings. The court noted that the defendants' request to amend their special defenses and the evidence presented during the trial adequately informed the plaintiff of the legal basis for the defense.
Impact
This ruling has significant implications for brokerage firms that operate in multiple states. It emphasizes the necessity for real estate brokers to be properly licensed in the states where they conduct business. The court's decision reinforces the principle that licensing laws are crucial in determining the ability of brokers to recover fees for services rendered.
Going forward, this case may serve as a precedent for similar disputes involving cross-state brokerage services and the applicability of state-specific licensing laws. Firms operating in multiple jurisdictions should take heed of this ruling to ensure compliance with local regulations to avoid similar legal challenges.
What's Next
New Capital Solutions has the option to appeal the ruling to a higher court, but it is unclear whether they will pursue this route. There are no related cases pending that could affect this ruling directly.