Miami Lawyer Blog

Real estate brokers have certain obligations to perform in selling real estate. If you hire a broker by signing a real estate brokerage contract or listing agreement, the agreement should set out the actions that the broker agrees to take in selling your property. Your broker also has fiduciary duties as your agent. If the broker fails to perform promised actions or fails to carry out his or her duties, you have some remedies available to you.
Getting Out of a Listing Agreement

If you want to get out of a listing agreement, for whatever reason, you should:

Look at the agreement itself to see if there is language which covers your situation
Look at the language of the agreement to see if there are duties the broker hasn't performed
Consider the time remaining on the agreement before it expires. It may be best to simply let it run out on its own, holding the listing broker to the specific conditions of sale listed in the listing agreement.

Contractual Obligations

Most states require brokerage and listing agreements to be in writing in order to be enforceable. The agreement determines when a commission is earned. A broker employed ''to sell'' or ''effect a sale'' of the property is not entitled to compensation until the broker effects a sale or procures from the buyer a binding contract of purchase. So, if your broker fails to bring about a sale or obtain a binding contract of purchase, as required by your contract, you don't have to pay your broker.

The brokerage or listing agreement typically sets out the actions that your broker agrees to take in selling your property. Such actions include:

Showing your property
Marketing your property
Negotiating with the buyers
Preparing the contract of sale
Representing you at closing

The listing agreement also typically contains a provision on how disputes should be resolved. This may include:

Arbitration
Mediation
Filing a lawsuit in small claims court or civil court

If your broker fails to do anything that he or she agreed to do in the listing agreement, you must use the dispute resolution process that you agreed to use. If a direct solution with your broker won't work, you should file a complaint with the appropriate board or court. In order for you to obtain relief, you must be able to show that you suffered some losses due to your broker's failure to perform contractual obligations.

You may want to file a complaint with your local or state real estate board, indicating that your broker did not perform as agreed.
Fiduciary Duties

Because you have a legal agency relationship with your broker, he or she has fiduciary duties to you. These duties flow from the law of agency. They include such things as:

Acting in your best interest in selling your property
Being loyal to you in carrying out the sale process
Disclosing pertinent information to you
Disclosing all offers to you

If your broker violates his or her fiduciary duties and you suffer damage as a result, you may file a complaint before the hearing body as agreed upon in the brokerage or listing agreement.

You should also file a complaint with your local or state real estate board, indicating that your broker violated his duties toward you.
Relief

Real estate brokerage contracts and listing agreements are contracts. Therefore, if you suffer losses because of your broker's failure to perform under the contract, you can sue your broker for breach of contract and obtain contractual remedies. These include:

Compensatory damages, which is a monetary award to reimburse you for your losses
Punitive damages, which is an award of money to punish or deter similar conduct in the future, depending on the law of your state, if your broker's conduct was wanton or reckless
Attorney's fees if there is a provision about attorney's fees in the listing agreement

If you suffer losses because your broker violated his or her fiduciary duties, you can sue your broker for breach of fiduciary duties, negligence, fraud or conversion. You can obtain:

Compensatory damages, which reimburse you for your losses
Punitive damages, which compensate you for wanton or reckless conduct of the broker
Attorney's fees, if allowed by law

Recovering Your Losses

If you're successful in your lawsuit against your broker and your broker has insufficient personal funds to pay for your losses, you might be able to obtain payment from your state's real estate fund. Some states have set up funds derived from real estate license fees for the payment of claims on unpaid judgments against real estate licensees for fraud and conversion of trust funds. Check with your state's real estate licensing board to see if your state has such a fund, and if so, how you can make a claim.

If you want some legal advice about your options for remedies or you want to file a complaint, contact a real estate attorney in your area.
Questions for Your Attorney

I think I have grounds to terminate my listing agreement, but my real estate broker does not agree? How complicated will it be to end the listing of my home? Could this interfere with the sale of my home if I want to list my house with another broker or if I find a buyer?
Where do I file a complaint if my broker fails to perform actions that she agreed to take in the listing agreement?
What kind of compensation can I get if my broker fails to act in my best interest?

About the Law Offices of Aaron Resnick, P.A.

The Law Offices of Aaron Resnick, P.A. is a full service boutique law firm with offices in Miami, Boca Raton, Gainesville/Ocala, Jacksonville and New York City. For additional information, please go to www.thefirmmiami.com, or call 305.672.7495.

In 2005, Florida's legislature decided that commercial real estate brokers needed the protection of lien rights. To cure the problem, the legislature adopted a comprehensive statutory system by which commercial brokers could establish liens for both sales and rental commissions.

The commercial broker's lien attaches only to the net proceeds of sale, and not to the real property. That means that buyer acquires title free of lien. The lien arises only when the commission is earned. That generally means when a sales contract is signed.

The lien belongs only to the broker in the brokerage agreement. It can not be factored or sold by the broker, which means the broker can not assign the lien to a third party or sell it. It can not be waived before the commission is earned.

Commercial brokers are required to inform property owners at time a listing agreement is entered that Florida Statutes create lien rights for commissions earned by the broker that are not waivable before the commission is earned. If the broker does not provide a disclosure, the broker can not enforce the lien under the statute.

To enforce the lien, a broker must provide a commission notice to the owner and closing agent. The notice must be sworn and signed before a notary public, and must include name of the owner, legal description of the property, name, mailing address, telephone number and license number of the broker, and effective date of the brokerage agreement. The notice must also include a statement that the statute requires the owner to dispute the claimed commission not later than 5 days after closing or the owner will be deemed to have confirmed the commission and the closing agent is required to pay the commission from the owner's net proceeds.

A notice must be delivered to both owner and closing agent within 30 days after a commission is earned and at least one day before closing. If the broker does not know who the closing agent is at the time the commission is earned, the broker must deliver the commission to the closing agent within 3 days after the broker finds out the identity of the closing agent.

After the broker delivers the commission notice, the broker may record the notice in the public records maintained by the Clerk of Court in the county where the property is located. Recording date establishes its priority with respect to any other claims against the owner's net proceeds of sale. The broker must record a release within 7 days after the commission is paid.

The Statute imposes specific duties on the closing agent with respect to the commission. The closing agent must reserve from the owners net proceeds an amount equal to the commission claimed by the broker if the owner has provided a commission notice. If the net proceeds are insufficient to pay the full commission, all of the net proceeds must be held by the closing agent.

If the broker has recorded a commission notice with the Clerk for at least 60 days, the closing agent is charged with constructive notice and must comply with the withholding requirement. Accordingly, the statute allows the closing agent to require the owner to deliver a sworn statement as to existence of terms of any brokerage agreement and the name, address, and telephone number of any brokerage who might have a claim to a commission. If the closing agent obtains this sworn statement from an owner, the closing agent must reserve from the owner's net proceeds an amount equal to the total commission disclosed by the owner, even if the closing agent did not receive a commission notice from the broker. If the closing agent determines that the owner's net proceeds will be inadequate to pay the entire commission, he must notify both owner and broker of that fact within 3 days of making the determination.

If the owner's cash from closing is insufficient to pay the commission, but the owner is getting a purchase money note, the closing agent is to reserve and release the note only as the owner and broker agree. If the owner and broker do not agree within 5 days after closing, the closing agent is required to file a court action seeking an order of disposition of the note.

Upon request of the closing agent or the owner, any broker who has recorded a commission notice with the clerk must give the closing agent a release in recordable form. The closing agent is required to hold the release in escrow until payment of the commission. The closing agent may deduct from the broker's commission recording cost of the release.

If the owner disputes the commission notice, the statute provides an expedited procedure under which the owner can apply for a court order. Under the procedure, the broker is ordered by the judge to show why the commission notice should not be discharged. If the broker fails, the broker must pay the attorneys fees and costs of the owner and the closing agent and the court will enter an order releasing the broker's.

There is no comparable statute with respect to residential real estate. In fact, Florida Statutes prohibit a broker or sales associate form recording any document which would affect title or encumber real property for purpose of collecting a commission unless expressly permitted by contract with the owner or the broker has otherwise perfected his claim through court judgment.

The statutes give commercial brokers a powerful tool for collection of commissions. They also increase the importance of reading and understanding all terms of brokerage and commission agreements. In your case, prompt action will minimize any problems. I suggest you consult with an experienced attorney immediately.

About the Law Offices of Aaron Resnick, P.A.

The Law Offices of Aaron Resnick, P.A. is a full service boutique law firm with offices in Miami, Boca Raton, Gainesville/Ocala, Jacksonville and New York City. For additional information, please go to www.thefirmmiami.com, or call 305.672.7495.

FRAUD ALERT!!! Florida Real Estate Licensees - Agents and Brokers!!!

The Florida Department of Business and Professional Regulations- DBPR- is warning ALL Florida real estate licensees, that is agents and brokers that apparently there is an identity theft scam that is targeting real estate licensees. For more information on the warning, click here. An unsolicited email which appears to be from the Department warns of pending disciplinary action against licenses. The email directs the recipient to call a Department investigator at a toll-free number and provide personal identification information.

Of course, any email like this is meant to scare the pants off of you and throw you off guard so that your defensive mechanism steps up to take action to protect your livelihood from possibly being pushed to a stop. This is intentional.

The broker is then told in the email to call an 800 number, provide their personal information to a " department investigator" .
The Department has confirmed that the email communication is in no way connected with the Department or its regulatory authority. This email is NOT from DBPR, the investigator is a scammer trying to get your personal information so they can steal the caller's identity.

If you get an email like this DO NOT RESPOND TO THE EMAIL and DO NOT CALL THE NUMBER IN THE EMAIL!!!!

Instead, call the DBPR at 850-487-1395 or go to the website to check on the status of your license and if there are any actions being taken on your license.

The theft of identity is a crime and should be reported to the authorities and to your local law enforcement.

The Department is currently investigating this scam and will keep updates on their website.

About the Law Offices of Aaron Resnick, P.A.

The Law Offices of Aaron Resnick, P.A. is a full service boutique law firm with offices in Miami, Boca Raton, Gainesville/Ocala, Jacksonville and New York City. For additional information, please go to www.thefirmmiami.com, or call 305.672.7495.

For many real estate professionals, commission disputes are simply part of the business. In fact, just about every licensee's career--whether spanning several years or several decades--is likely to include at least some experience with a dispute over commissions. Of course, the origin of the dispute may vary. Maybe it involved a seller whose property you had listed, who decided before the closing that he or she didn't want to pay the listing agreement's agreed-upon commission. Or the dispute was with a broker from another firm and involved the question of whether or not you were the procuring cause of a sale.

In this blog post we will discuss the different type of commission dispute--the one that arises between brokers and their sales associates -- and some of the common questions.

Will the Florida Real Estate Commission resolve a commission dispute that exists between a broker and his or her sales associate?

No. Generally speaking, FREC doesn't resolve commission disputes. Disputes over commissions (or any other agreed-upon compensation) between a broker/brokerage firm and its sales associates are civil matters. The ultimate recourse for sales associates looking to recover unpaid commissions is to file suit against the broker/brokerage firm.

If these disputes are civil matters, then what factors would be considered by a court in determining the outcome of the lawsuit?

Generally, the "employment" agreement that exists between the broker/brokerage firm and the sales associate will be the controlling factor in determining outcome. Many brokers require a sales associate to sign a written independent contractor agreement as a condition to being allowed to place his or her license with the broker.

These written agreements typically address compensation matters such as the amount of the sales associate's commission split, when a sales associate earns a commission, the time frame in which the broker/brokerage firm is obligated to pay the sales associate, the rights of the broker/brokerage firm to deduct from the sales associate's compensation amounts due the broker/brokerage firm, as well as many other matters relating to the broker-sales associate "employment" relationship.

In addition to a written independent contractor agreement, any existing office policy manual as well as the past business practice of the broker/brokerage company and any verbal agreement between the parties that can be shown to exist may play an important role in determining a sales associate's entitlement to, and the broker/brokerage firm's obligation to pay, the disputed compensation.

If a sales associate who obtains a judgment for disputed commissions is not paid by the broker pursuant to that civil judgment, would FREC then have cause to discipline the broker if it receives a complaint against the broker?

Yes. Section 475.25(1)(d), Florida Statutes, provides that FREC may discipline a licensee where a civil judgment for a share of a commission has been obtained against that licensee "and said judgment has not been satisfied in accordance with the terms of the judgment within a reasonable time. ..."

Some commission disputes between brokers who are real estate licensees are subject to mandatory arbitration at their local Board/Association of Realtors®. Would a commission dispute between a sales associate and his or her broker, where both parties are Realtors, also be subject to arbitration at the local Board/Association of Realtors®?

Such a dispute would be subject to local Board arbitration only if both parties (i.e., both the broker and the sales associate) voluntarily agree to the arbitration in writing and the local Board/Association of Realtors® finds the matter properly subject to arbitration.

The Law Offices of Aaron Resnick, P.A.'s group of attorneys are able to assist clients in every facet of Fashion Law. For more information contact attorney Aaron Resnick,
e the norm." According to Resnick, proper legal work may have prevented this dispute.