If you lose a bid for a property despite having submitted the highest financial bid, does this mean that you have a claim for damages against the broker? Maybe not.

On April 15, 2021, the Appellate Division in an unpublished decision affirmed a trial court’s dismissal of tortious interference and common law fraud claims against a realtor relating to the sale of a property. Teach Solais NJ, LLC v. Rivka, Nagel, et al., Docket No. A-3291-18, slip op. at 4 (App. Div. April 15, 2021).

In this case, defendant’s property was listed for short sale with a real estate agent Rivka Nagel. Nagel listed the property for short sale at $89,000. Teach Solais, N.J, LLC (“Teach Solais”), a commercial real estate developer, responded with a $100,000 offer with a price escalation up to $200,000.

Despite being the highest offer, the property owner rejected the offer and instead accepted an offer of $79,000. In response, Teach Solais filed a lawsuit seeking equitable relief and compensatory damages.

During the pendency of the case, Nagel notified Teach Solais’s agent that first sale fell through and that the property was available again. Teach Solais resubmitted their offer of $100,000 with a price escalation up to $200,000. Again, the property owner rejected the offer and entered into contract with another party for $105,000. Ultimately, the second sale was also nullified, and the property was sold at sheriff’s sale for $81,000.

In the lawsuit, Teach Solais alleged that Nagel had committed tortious interference because the seller had rejected the highest offer for the property. However, in order to obtain compensatory relief based on tortious interference with a contract, a party is required to show evidence that the offending party intentionally and improperly interfered with its prospective contractual relation, and as a result, is liable for the aggrieved party’s pecuniary loss.

Such interference must consist of “(a) inducing or otherwise causing a third person not to enter into or continue the prospective relation or (b) preventing the other from acquiring or continuing the prospective relation.” Nostrame v. Santiago, 213 N.J. 109, 122 (2013).

In this matter, the Court held that Nagel was clearly the sole agent for the seller and never misrepresented her role in the negotiations. In addition, Nagel acted in good faith in conveying the seller’s rejection of Teach Soalis’ offers. Although the seller for reasons unknown had not accepted the highest offer, this on its own did not establish a case of tortious interference.

In the end, just because the highest offer is not accepted, does not necessarily mean there is foul play.