Learn about the legal requirements to protect your right to compensation.
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When can an Italian real estate broker (i.e., a neutral intermediary under Italian law, though in practice often first contacted by one of the parties to facilitate the transaction) lose the right to commission—even after successfully bringing the parties to a deal? A recent ruling by the Naples Court of Appeal (October 16, 2024, no. 4138) sheds light on the types of conduct that may lead to the loss of commission entitlement. This article reviews the case, draws the line between mere error and actual breach of duty, and defines—with practical examples—the boundaries of broker liability. A useful tool for brokers, industry professionals, and clients seeking informed legal protection.
In the real estate market, the broker plays a pivotal role: the broker connects buyer and seller and facilitates the transaction. However, the right to commission arises only under specific conditions, and it may be lost if the broker engages in improper conduct or fails to disclose material information. To understand when compensation is truly at risk, we must look at the rules of the Italian Civil Code.
The key provisions governing brokerage agreements include:
According to case law, the right to commission vests when the broker’s activity results in a binding agreement between the parties, even if the deal is not finalized by a notarial deed. Therefore, a broker’s role is assessed based on the effectiveness of their involvement in reaching an agreement—not what happens afterward.
Still, the right to commission is not absolute. If the broker breaches core obligations—for instance, by omitting material information or mishandling negotiations—compensation may be lost. But not every shortcoming qualifies: under Art. 1455, the breach must be serious and must have had a material impact on the transaction’s outcome.
In short, the broker loses the right to commission only when they breach essential duties and their conduct has played a decisive role in preventing the deal. That is the lens through which the Naples Court of Appeal approached a complex and still widely debated issue in the real estate sector.
In the case reviewed by the Ninth Chamber of the Naples Court of Appeal (Judgment of October 16, 2024, no. 4138), the buyer sought to avoid paying commission by claiming that the broker failed to disclose certain key facts. Specifically, the buyer alleged not having been informed about pending condominium expenses or about a prior price reduction from €140,000 to €130,000. However, the Court found that these claims did not amount to a serious breach under Art. 1455.
The ruling itself clarifies that:
“not every inaccurate piece of information gives rise to the broker’s liability for breach of duty,” and that the complaint regarding the omitted disclosure of condominium charges was “so vague that it prevented any meaningful assessment of the impact such omission may have had on the successful outcome of the transaction.”
As to the price reduction, the Court held that the buyer herself did not consider it a decisive factor in withdrawing the offer, noting that:
“The reduction from €140,000 to €130,000 […] was regarded by the appellant as immaterial.”
Moreover, the Court observed that the buyer’s conduct lacked good faith, especially in light of a written statement dated July 4, 2012, in which she explicitly declared her intention to withdraw from the deal due to pending condominium works. At the same time, the buyer requested the return of the earnest money deposit—an amount which, under Italian law, has the legal effect of a confirmatory deposit. This demonstrates that the decision to withdraw had already been made, regardless of the alleged omissions.
Finally, the Court rejected the idea that the broker had acknowledged liability by returning the earnest money deposit check:
“The broker’s conduct […] does not constitute conclusive behavior indicating an acknowledgment of the buyer’s right to walk away from the transaction free of any obligation.”
The outcome? The Court confirmed that a valid deal had been concluded and that the buyer’s claim of breach was unfounded. The broker did not lose commission over those allegations.
However—as the next section shows—his position was ultimately compromised for a different reason: his mishandling of the earnest money deposit, which became the key issue in the case.
Contrary to the buyer’s claims, it was not the failure to disclose condominium costs or the prior price reduction that cost the broker his commission. The decisive mistake was his mishandling of the earnest money deposit, in violation of the seller’s instructions.
Specifically, the buyer had provided the broker with a €5,000 check as a good-faith earnest money deposit to be held in escrow. On June 27, 2012, the buyer made a formal purchase offer, which the seller accepted on July 4. That same day, however, the buyer declared her intention to withdraw, and the broker, without consulting the seller, unilaterally returned the earnest money deposit.
The Naples Court of Appeal found this to be a material breach of the brokerage agreement—not toward the buyer, but toward the seller, who was the broker’s client. The Court held that the broker should have delivered the earnest money deposit to the seller, who had the right to retain it as compensation for the buyer’s unjustified withdrawal. By returning the funds without authorization, the broker deprived the seller of a lawful remedy.
A key passage from the ruling states:
“The trial court determined that the return of the check occurred without the authorization of Mr. [REDACTED], and without consulting him beforehand. This, the court concluded, constitutes a serious breach of the brokerage mandate.”
As a result, the brokerage contract was terminated due to the broker’s fault, and the court ordered the broker to personally reimburse the seller the full amount of the earnest money deposit. In essence, the earnest money deposit—not the allegedly omitted information—became the central legal issue. And it was on this point that the broker lost everything: the contractual mandate, the commission, and the client’s trust.
The Naples Court of Appeal case highlights the fine—but crucial—distinction between a formal irregularity and a material breach. In this case, the broker did not lose the commission for vague or immaterial omissions toward the buyer. The real turning point was the violation of contractual mandate from the seller—the party who instructed the broker to handle the transaction.
Returning the earnest money deposit without the seller’s consent effectively deprived the seller of a statutory safeguard under Art. 1385 Italian Civil Code, which entitles a seller to retain an earnest money deposit in case of the buyer’s withdrawal. The Court found this conduct sufficient to terminate the brokerage contract for breach, nullifying the broker’s entitlement to commission. This was not a mere technicality: it amounted to a breach of the client’s legally protected expectations and a failure to act in accordance with the principles of professional integrity.
For brokers, the takeaway is clear: neutrality does not mean indifference. Quando si è fiduciari di una parte — in questo caso, il venditore — non si può agire di testa propria “per chiudere la questione” o per compiacere l’altra parte. Any action involving escrowed funds or entrusted assets must be shared, documented, and authorized. Otherwise, even a broker who successfully facilitated the deal may walk away empty-handed.
For buyers and sellers, the lesson is different: commission is not owed under all circumstances, nor can it be withheld for just any reason. Those who challenge the payment must prove that the broker’s breach affected concrete and legally protected interests. In this case, the seller succeeded in doing just that—and prevailed.
