Changing a Property Sale to A Share Sale

Imagine you are a commercial broker. Your client retains you to sell one of it its office buildings. You find a buyer for the property who ends up being the buyer but, your client and the buyer (its shareholder) change the deal from an asset purchase to a share purchase and your client’s shareholder sells its shares in your client to the buyer and then refuses to pay you a $400,000.00 commission arguing that the “building” was not sold. You take your client (now former client) to court. Will you be successful?

Those facts arose in a very recent case. Briefly, Brookfield as agent entered into an exclusive listing with A to sell A’s office building for a 1.6% fee on “successful completion of the sale of the Property”. The listing expired June 1, 2011 but had a 120 day hold-over period. Brookfield found out in July 2011 that A was selling the Property to P with a closing of August 17, 2011 and alleged it introduced P to the property and sent a commission invoice to A prior to closing. A said Brookfield was not entitled to commission.

Brookfield sued A and A subsequently advised Brookfield that the sale agreement with P had been terminated and P was buying the shares owned by A. Holdings (a related company to A) in A.

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