Background
A real-estate broker and a project seller entered into an “International Real Estate Sales Agreement” on October 6, 2015. The agreement provided for a commission of 10% plus VAT on residential sales concluded through the broker, payable when the buyer paid a 25% deposit. It also stated that the commission would be charged back to the broker in “all circumstances giving rise to cancellation of the sale.” The broker procured signed contracts with a third-party buyer and received its commission.
The seller later asserted that the buyer had failed to pay the remaining purchase price, that the sales had been cancelled, and that title had never been transferred. It invoiced the broker for TRY 85,225 and commenced non-judgment enforcement proceedings to recover the commission. The broker brought a negative declaratory action seeking a determination that it owed nothing. The trial court granted that relief and cancelled the enforcement proceeding, while rejecting the broker’s claim for compensation.
The seller appealed, arguing both that the privately executed preliminary real-estate sale agreements were void for failure to comply with the required official form and that the agreement’s reference to “all” cancellations required repayment whenever a sale failed for any reason.
The Court’s Holding
The 12th Civil Chamber dismissed the seller’s appeal on the merits. Under Articles 520 and 521 of the Turkish Code of Obligations, the court explained, a broker generally earns its fee when the contract contemplated by the brokerage agreement is concluded as a result of the broker’s activity. Here, the broker performed its undertaking by procuring the buyer’s signature on the “final agreement,” and payment of the commission indicated that the contractual deposit condition had been satisfied.
The seller could not avoid the commission by arguing that its buyer contracts were invalid because they had been executed only in ordinary written form. The seller itself was responsible for concluding those contracts in the legally required official form, so the resulting invalidity could not be attributed to the broker.
The seller also failed to prove that the buyer had terminated the contracts or that another qualifying cancellation had occurred; the fact that title remained registered to the seller was insufficient. The court held that Article 521 is relatively mandatory and does not permit the broker, after procuring the contract, to be made the guarantor of the buyer’s performance or of the contract’s continuation. The phrase “all cancellations” therefore had to be construed narrowly, within the limits of circumstances in which the broker could lose its right to a fee. Because the conditions for repayment were not established, the judgment declaring that the broker owed nothing was upheld.
Key Takeaways
- A real-estate broker who performs the agreed task of procuring a contract cannot ordinarily be required to guarantee the buyer’s later performance or the continuing effectiveness of the sale.
- A seller cannot shift responsibility to the broker for formal invalidity caused by the seller’s own failure to execute the buyer contract in the legally required form.
- A contractual reference to repayment upon “all cancellations” is construed consistently with the mandatory limits of Turkish brokerage law, and the party seeking repayment must prove that a qualifying cancellation occurred.
Why It Matters
The decision limits the use of broad commission-clawback language to transfer ordinary buyer-default and transaction-continuation risks to real-estate brokers. Once the broker has procured the contract and satisfied the agreed conditions for earning its fee, the seller must establish a legally sufficient basis for forfeiture rather than relying merely on the sale’s failure to close.
The ruling also underscores that parties responsible for observing mandatory formalities cannot invoke their own defective execution of a transaction to recover a commission from a broker who did not cause the defect.