- Florida real estate agents have considerable legal protections under the terms of listing agreements.
- It's illegal for an agent or broker to share commissions with any unlicensed individual.
- Agreeing to reduce commissions (or not fighting for “fair shares”) hurts the agent and the entire industry.
In this monthly column, a member of Miami’s Master Brokers Forum will examine and positively resolve potential differences which may arise between real estate professionals in the field.
This month’s edition is written by Master Broker Claudia Lewis from Century 21 Premier Elite Realty. The no. 1 Top Producer for Century 21 in Miami, Lewis is also Membership Chair for the Miami Chapter of the Master Brokers Forum.
The situation: As a Miami real estate agent’s deal is nearly closed, the commission is being threatened by an outside source.
In our industry, “buyer beware” is a commonly-heard phrase, but the truth is that real estate professionals are required to disclose just about everything to the buyer so the buyer is informed and protected. The question is, does the agent have any protection? To be more specific, is the agent’s commission protected, or is it up for grabs?
- Is it up to the seller to decide that we should only get half the commission because there was no other agent involved in the transaction?
- Is it legal for the real estate attorney, or any other unlicensed individual, to request a referral fee?
- Is it acceptable for another Realtor’s name to suddenly appear on the contract during the process of negotiations, when that agent has not been involved in the transaction at all up to this point?
The answers? No, nope and absolutely not!
The truth is that we real estate professionals enjoy serious legal protections with respect to our commissions. According to the Florida statutes regarding real estate transactions, the listing broker will receive the commission in full unless there is a cooperating agent involved in the transaction with whom the commission should be split. Specifically, the amount of the commission is protected by the listing agreement that the seller signed when the listing was accepted. The listing agreement is a contract between the seller and broker, and the percentage agreed upon by both parties in that agreement cannot be changed unless both the broker and seller agree to the change in writing.
Regardless of whether or not there is a second broker involved in the sale, the commission agreed to by the listing broker and the seller remains the same. Sellers often think that if there is only one agent involved in the sale, the listing broker only receives half of the agreed-upon commission, but that is not true. The full commission belongs to the listing broker, as agreed upon in the listing agreement.
Twice in my career, an attorney or other unlicensed individual has asked for a portion of the commission on one of my transactions. The first time involved an attorney who had just started working in the state of Florida, and was not aware of the local statutes that govern the real estate industry. I politely informed him that he was out of line, sent him a link to the statute, and he apologized profusely after realizing that he could be disbarred for making a request of that nature in Florida.
The second time that this happened, a very experienced local attorney had referred a listing to me and asked for a referral fee. Again, I sent him the statute and suggested to him that he would need to take the Florida exam and become a licensed Realtor in order to receive referral fees of any kind from any Realtor in Florida, our statutes clearly state that it is not legal for an agent or broker to share commissions with any unlicensed individual.
The name of the game here is “procuring cause.” The Florida statutes state that no one except the listing broker, the cooperating broker, and the principal parties involved in the transaction can be given any portion of the commission.
The most common (and disconcerting) scenario is when another real estate professional interferes in a transaction as the deal is being negotiated — or even right before closing — claiming to represent one or another of the principal parties.
Occasionally, after a counteroffer, a name will suddenly be added to the contract as the agent representing the buyer, when in fact that agent had never notified the listing agent previously or even shown the property — but is still requesting their share of the commission. Situations like this can and should be reported to the Miami Association of Realtors.
My advice to all agents is to vigorously protect your commissions and make sure that you are properly paid in full for the work that you do. Reducing commissions or not fighting for your fair share certainly hurts you, but it also sets a dangerous precedent, which ultimately affects us all.
The Master Brokers Forum is a home-grown, elite network of South Florida’s top-producing real estate professionals, built on a core foundation of ethical and professional behavior.