Real Estate Non Compete

I worked for a real estate developer from 10/01 until 02/05 as sales manager, resale coordinator, and builder liaison. I signed a non compete when I started that stated that I would not "work in the real estate industry in Franklin county for a period of three years after leaving." The company is not a member of the local realtor association, multiple listing service, and only sells within this community, and to the best of my knowledge I was the only person required to sign this non compete.
In January this year, my employer verbally informed me that the company would no longer be paying me for two of three items that had been agreed upon in the original agreement. Additionally they hired another agent to "assist" with resales and I would have to share in commissions with her. This was unacceptable and I resigned. I have purchased a real estate franchise to operate in Franklin County. The company is now trying to hold me to the not compete. Do you feel that it is enforceable?

1 answer  |  asked Apr 19, 2005 07:22 AM [EST]  |  applies to Pennsylvania

Unlock Non-Compete Agreements: Keys to Escape

Answers (1)

Christopher Ezold
You may not be bound by the noncompetition agreement.

Before I respond to your inquiry, I must state that we have not spoken, I have not reviewed the relevant documents and facts, and I do not represent you. Therefore, my discussion below is not a legal opinion, but is informational only. Finally, my discussion applies only to issues to which Pennsylvania or Federal law apply, unless otherwise specified.

That being said, a noncompetition contract is just that, a contract. The employer must live up to their part of the deal for you to be bound by yours. Therefore, if your employer will not pay you your agreed-upon salary or wage items, you may not be bound by the noncompete. I would need to read the noncompete and gather facts regarding the how the wage items were agreed upon to give you an opinion on your specific situation.

Furthermore, a noncompe is also only enforceable to the extent that its time and geographic scopes are reasonable, and only so far as it protects a legitimate business interest of the employer.

The time (three years), appears to be more than most courts would allow. This determination, however, depends on the nature of the market, your specific duties for the employer, how easy you are to replace and how much damage you could do as a competitor. These are all facts I would have to know before making a determination as to the reasonableness of the time limit.

Whether barring you from your current business protects a legitimate business interest of your former employer is another fact question. You worked in a narrow area for your former employer, which is the area that a court might bar you from working in prospectively. Just because your former employer is in the real estate industry does not mean that you are barred from the entire industry. Instead, you might be barred from working as a sales manager, resale coordinator and builder liason - which is exactly what you did for your former employer, and where they might have a right to expect you to refrain from competing with them. Again, these are all fact-based analyses.

If you would like to discuss this matter further, please feel free to contact me at the below address(es) or number.

/Christopher E. Ezold/
Nancy O'Mara Ezold, P.C.
401 City Line Avenue,
Suite 904
Bala Cynwyd, PA 19004
(610) 660-5585

posted by Christopher Ezold  |  Apr 19, 2005 2:40 PM [EST]

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