A judge ordered the Calgary Drop-In Centre must pay $50,000 to a real estate broker for services he offered in the sale of a northeast hotel, even though there was no signed contract.
The centre hopes to turn the former Quality Inn into affordable housing, but the plan has been facing challenges from the beginning — including opposition from neighbours and the city's rejection of the Centre 4800 proposal last October.
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The Court of Queen's Bench heard Farouk Mohamed contacted the centre about the former Quality Inn on Edmonton Trail N.E. in March 2012.
After a tour of the facility, there was a discussion about paying Mohamed for his work as a broker, but no paperwork was signed.
"We had always intended to compensate the real estate agent on this," said Debbie Newman, executive director of the Calgary Drop-In & Rehab Centre Society. "He wasn't our real estate agent. There wasn't a formal agreement signed."
The court heard there was a conversation where a negotiated commission of 2 per cent of the $8-million sale price should be paid to Farouk, totaling $160,000.
The Drop-In Centre countered with a $15,000 "finder's fee." The judge didn't accept that as appropriate, and set the payout at $50,000 as the fair value of services.
"I'm of the opinion they got off fairly easy," said Ken Lamb, broker and owner of Real Estate Professionals Inc. "He dealt with it, found the property, found the potential buyer, put them together."
Lamb says there are no plans to pursue further legal action.
"To be honest I think it was very poorly handled [but] we've moved on, we've forgotten about it, we'll go on. Onward and upward."
Newman says the lawsuit has no impact on their proposal to convert the former hotel into an affordable housing complex. The plan will be heard by the Subdivision and Development Appeal Board on March 22.