The Puerto Rico Court of Appeals recently ruled on a significant case involving a dispute over a real estate commission. The court's decision affects real estate agents and property sellers, clarifying the requirements for enforceable contracts in property transactions. The ruling emphasizes the importance of clear terms in contracts, particularly regarding expiration dates and obligations.

The case, titled Larissa Lugo Colón; Reality Realty, P.S.C. v. Ryan Kowalski; Hang Tai Dang, También Conocida Como Hanna Kowalski, Ambos Por Sí Y en Representación De La Sociedad Legal De Gananciales Compuesta Por Ambos (Docket TA2026AP00801), originated from a legal battle over a commission payment related to a property sale. The court's decision, issued on September 8, 2026, has implications for how real estate contracts are structured and enforced in Puerto Rico.

Background

The dispute began when Larissa Lugo Colón and her company, Reality Realty, filed a lawsuit against Ryan Kowalski and Hang Tai Dang, who were selling a property in Dorado, Puerto Rico. Lugo Colón claimed that the sellers had agreed to pay her a commission of five percent of the sale price for her services as a real estate agent. The sellers had signed a contract allowing her to manage the sale of their property.

According to the lawsuit, the sellers entered into a Purchase and Sale Agreement for the property valued at $1,550,000. However, they later withdrew from the transaction before the closing date. This prompted Lugo Colón to seek the commission payment, claiming that the sellers were obligated to pay her due to their withdrawal after the option payment had been made.

The sellers contested the claim, arguing that the contract was invalid because it did not specify an expiration date. They claimed that the real estate commission was not due since the sale did not go through due to actions of the buyers. The case eventually reached the Puerto Rico Court of Appeals after the lower court ruled in favor of Lugo Colón, granting her a summary judgment.

The Ruling

The Puerto Rico Court of Appeals reviewed the lower court's decision and ultimately reversed it. The court found that the contract between the parties was null and void due to the absence of a specific expiration date. Judge Monge Gómez, writing for the panel, stated, "the contract of brokerage that we are dealing with does not identify a specific expiration date or term and, therefore, is null." The court emphasized that a valid contract must have clear terms, including a definitive expiration date, to be enforceable. The ruling highlighted that the lack of such a term rendered the agreement unenforceable under Puerto Rican law, specifically referencing the Law to Regulate the Business of Real Estate and the Profession of Real Estate Brokers.

The court also pointed out that the sellers had not waived their right to contest the commission payment and that the summary judgment granted by the lower court was inappropriate given the circumstances. The ruling effectively dismissed the lawsuit brought by Lugo Colón and Reality Realty.

Impact

This ruling has significant implications for real estate transactions in Puerto Rico. It underscores the necessity for clear and specific terms in contracts, particularly regarding expiration dates and obligations. Real estate agents and property sellers must ensure that their contracts comply with legal requirements to avoid disputes over commission payments.

The decision may also influence future cases involving real estate commissions, as it establishes a precedent that contracts lacking clear expiration terms may be deemed invalid. This could lead to more stringent practices in drafting real estate agreements to prevent similar legal challenges.

What's Next

The parties involved in the case may consider appealing the ruling, although details were not available in the court filing regarding any potential appeal. The outcome of this case could also influence ongoing discussions about real estate regulations and practices in Puerto Rico.