The New York Supreme Court recently ruled in a case involving a dispute over a real estate commission. The court decided that the estate of Irwin Paul Lew is entitled to funds that had been deposited with the Nassau County Clerk's Office. This case, Kaplan v. Levine, affects the parties involved in the real estate transaction and clarifies the legal obligations regarding commission payments in real estate sales.
In this case, Norman Kaplan, acting as the executor of Lew's estate, brought the action against Andrea Levine and Keller Williams Realty Gold Coast. The dispute arose after Lew, the owner of a property located at 28 Vanderbilt Drive in Lake Success, New York, entered into a listing agreement with the defendants. The case highlights the complexities involved in real estate transactions, particularly regarding commission payments.
The background of the case dates back to March 14, 2020, when Lew signed an exclusive right to sell listing agreement with the defendants. During the term of this agreement, the defendants found buyers for the property, and a contract of sale was executed. However, at the closing on March 19, 2021, Lew did not pay the commission to the defendants. Instead, a stakeholder agreement was made, stating that a disputed commission of $36,275 would be deposited with the County Clerk within five days.
Following the closing, the commission was deposited with the County Clerk on March 24, 2021. However, the defendants did not take any action to claim the funds for over ten months. On January 31, 2022, Lew initiated the action to have the funds released to him. After Lew's death, Kaplan was substituted as the plaintiff.
The court, presided over by Judge Gary M. Carlton, held a nonjury trial on March 6, 2026. The court's ruling focused on the interpretation of Real Property Law (RPL) § 294-b, which outlines the procedures for handling real estate commission disputes. The key issue was whether the deposit of the commission three business days after the deed delivery met the statutory requirement of being made 'at the time of delivery of the deed.'
In its ruling, the court stated, "The deposit mechanism was implemented as part of the closing process, and that neither plaintiff nor defendants had access to the disputed funds following delivery of the deed." The court emphasized that the short delay in depositing the funds did not prejudice the defendants and noted that the central purpose of the statute—to secure the disputed commission—was achieved.
The court concluded that Kaplan's actions constituted substantial compliance with the statute. The ruling stated, "Allowing defendants to avoid the statute's shortened limitations period based solely on a brief, nonprejudicial delay would be inconsistent with the statute's structure." As a result, the court awarded judgment in favor of Kaplan, dismissing the defendants' counterclaims as time-barred.
This ruling has significant implications for future real estate transactions in New York. It clarifies that minor delays in the deposit of disputed commissions may not invalidate a seller's compliance with statutory requirements, provided the funds are secured and the delay does not harm the other party. This case sets a precedent that could influence how similar disputes are handled in the future.
Moving forward, the ruling in Kaplan v. Levine may encourage parties involved in real estate transactions to adhere to the statutory requirements while also understanding that courts may allow for some flexibility in compliance. The case highlights the importance of prompt action in disputes over commission payments and reinforces the need for clear agreements during real estate transactions.
As for what’s next, the defendants may consider appealing the ruling, but details on any potential appeal were not available in the court filing. The case serves as a reminder of the complexities involved in real estate transactions and the legal obligations of all parties involved.