A New York appellate court has ruled against Thomas J. McCarthy Real Estate, Inc. in a dispute over a real estate brokerage commission. The court's decision, issued on November 4, 2026, affects real estate brokers and their rights to commissions when sales do not close as expected.

The case, Thomas J. McCarthy Real Estate, Inc. v. Herlin, docket number 2025-03424, arose from a disagreement between the real estate firm and Rodney Herlin, the property owner. McCarthy Real Estate claimed it was entitled to a commission after facilitating a potential sale, while Herlin disputed the claim, leading to a court battle.

Background

In September 2022, McCarthy Real Estate and Herlin entered into an exclusive right to sell agreement. This agreement stipulated that the real estate firm would earn a commission if they produced a buyer who was ready, willing, and able to purchase the property. Following this agreement, McCarthy Real Estate engaged with two potential buyers who later signed a residential contract of sale with Herlin in August 2023.

However, the sale did not close on the scheduled date. In November 2023, McCarthy Real Estate demanded payment of the commission through two letters sent to Herlin. When no payment was received, the firm initiated legal action in January 2024, seeking to recover the commission. The case then moved through the court system, culminating in a motion for summary judgment, where both parties sought a ruling from the court.

The Ruling

The Supreme Court of Suffolk County ruled on February 10, 2025, denying McCarthy Real Estate's motion for summary judgment and granting Herlin's motion to dismiss the complaint. The plaintiffs appealed this decision to the Appellate Division of the Supreme Court of New York.

The appellate court upheld the lower court's ruling, stating, "The evidence submitted by the plaintiffs failed to demonstrate that, pursuant to the exclusive right to sell agreement, they produced a buyer who was ready, willing, and able to purchase the property." The court emphasized that the plaintiffs did not meet the necessary legal standards to claim the commission, as the buyers were not in a position to finalize the purchase.

Impact

This ruling has significant implications for real estate brokers and their clients. It reinforces the importance of fulfilling contractual obligations in real estate transactions. Brokers must ensure that they not only find buyers but also that those buyers are genuinely prepared to complete the purchase.

The court's decision may also affect how future exclusive right to sell agreements are structured. Brokers and property owners may need to clarify terms regarding commission rights and the conditions under which commissions are earned. This case serves as a reminder that even when a buyer is found, the completion of a sale is essential for a broker to claim their commission.

What's Next

Details were not available in the court filing regarding whether McCarthy Real Estate plans to appeal the decision further. There is no indication of any related cases pending that may influence or arise from this ruling.