Real estate commissions

[Dave Bertram]

Jurisdiction

New York

This is an important one that needs a answer by tomorrow morning. Say I got an agreement to be paid a commission for a lease over a period of years. The agreement is that the commission will be paid as long as the tenant is there. A commission will be pro rated to be paid at the anniversary or beginning of year each year for 10 years. Say tenant leaves in middle of that year, then we have to return the commission for that year. The payment will go to brokerage. But say 8 years down the road agent is not with the brokerage, and if wed have to return the commission amount, is the agent responsible for the brokerages portion being returned to landlord (say the brokerage wont return their portion, or if that agent and broker arent in contact anymore)?

The commission agreement reads

"The parties agree that Sam Smith on Broker's behalf has procured for Owner a tenant, Mega Furniture & Material For Less II". This is the line that describes the agent. The principal broker is signing this agreement.

Thanks for all your input!

 

[adjusterjack]

This is an important one that needs a answer by tomorrow morning.

Why tomorrow morning? Is it a homework assignment due tomorrow morning?

"The parties agree that Sam Smith on Broker's behalf has procured for Owner a tenant, Mega Furniture & Material For Less II". This is the line that describes the agent. The principal broker is signing this agreement.

Nah. Not going to touch that with only one sentence out of context.

Upload the complete contract, redacting any identifying information. Also do a better job of identifying the parties. If you are a party to the agreement refer to yourself in the first person (I did this, I did that). You can make up names for the others. For example: John the broker, Sam the agent, Bill the tenant, and make sure you include the relevant dates that everything occurred.

 

[Dave Bertram]

Why tomorrow morning? Is it a homework assignment due tomorrow morning?



Nah. Not going to touch that with only one sentence out of context.

Upload the complete contract, redacting any identifying information. Also do a better job of identifying the parties. If you are a party to the agreement refer to yourself in the first person (I did this, I did that). You can make up names for the others. For example: John the broker, Sam the agent, Bill the tenant, and make sure you include the relevant dates that everything occurred.

Okay hold on. By the way, question is do I even need to put my name in the contract at all if Im only the agent. My agreement is really with my sponsoring broker. Is there even a need to put my name in this?

 

[adjusterjack]

question is do I even need to put my name in the contract

You mean this contract has not even been written yet?

if Im only the agent.

As agent, what are your duties with regard to this contract? And will you be deriving any monetary benefit from it?

My agreement is really with my sponsoring broker. Is there even a need to put my name in this?

What do the other parties to the contract want you to do?

 

[Dave Bertram]

Here it is.

 

[Dave Bertram]

You mean this contract has not even been written yet?



As agent, what are your duties with regard to this contract? And will you be deriving any monetary benefit from it?



What do the other parties to the contract want you to do?

This contract has been going back and forth for past few days. The lease was already signed last week.This is the latest version that was put out today and is supposed to be signed tomorrow.

 

[Dave Bertram]

You mean this contract has not even been written yet?



As agent, what are your duties with regard to this contract? And will you be deriving any monetary benefit from it?



What do the other parties to the contract want you to do?

Well I was the one who procured the tenant, but we generally get paid from our principal brokers. So yes there is monetary benefit coming from the landlord paid to my broker who pays me a split. In fact all the commission agreements are generally between landlord and the principal broker without an agent name on commission agreement. Is it even necessary to have my name on it?

 

[adjusterjack]

I see only two parties to the contract: the owner of the property and the broker who is representing the owner in finding a tenant.

Your last paragraph answered the question about your part in all this.

The contract is between the property owner and the broker.

Yous commission split for whatever work you do for the broker is a separate contract between you and the broker, either oral or written.

I don't see any reason for you to be on that contract unless your broker wants you on it. If you aren't on that contract then you have no obligation to return any money to the property owner.

If you were on the contract you would share the liability with the broker (jointly and severally) and you could be responsible for refunding all of the pro-rated amount if the broker doesn't pay his share.

If you are not on the contract then your obligation could be to the broker to reimburse him for unearned commission, a chargeback so to speak. But that depends on your agreement with the broker.

What is your agreement with the broker regarding chargebacks if part of the annual commission split to you is unearned because the tenant moved out midyear?

 

[Dave Bertram]

I see only two parties to the contract: the owner of the property and the broker who is representing the owner in finding a tenant.

Your last paragraph answered the question about your part in all this.

The contract is between the property owner and the broker.

Yous commission split for whatever work you do for the broker is a separate contract between you and the broker, either oral or written.

I don't see any reason for you to be on that contract unless your broker wants you on it. If you aren't on that contract then you have no obligation to return any money to the property owner.

If you were on the contract you would share the liability with the broker (jointly and severally) and you could be responsible for refunding all of the pro-rated amount if the broker doesn't pay his share.

If you are not on the contract then your obligation could be to the broker to reimburse him for unearned commission, a chargeback so to speak. But that depends on your agreement with the broker.

What is your agreement with the broker regarding chargebacks if part of the annual commission split to you is unearned because the tenant moved out midyear?

Nice. I thought so. So it does say my name on the contract "1. The parties agree that ---- ---- on Broker's behalf has procured for Owner a tenant." The part that's ---- ---- is my name. Sounds like theres no need for my name to be on here-its just asking for trouble?

And here's another twist. We don't have any agreements with our principal broker at my agency-its all based on trust. And its worked for many generations with all the agents at my office.

 

[Dave Bertram]

Actually regarding this line- 1. The parties agree that ---- ---- on Broker's behalf has procured for Owner a tenant. This was just put in by landlord. My original line was Agent --- ----, of brokerage ----- ----- has procured tenant --- ---- for the owner. He took that out and changed it-not sure if that was a sly move by him...

 

[Zigner]

If you do not understand the contract and/or concerned about possible negative effects upon you of the contract, then you should not sign it until it's been reviewed by an attorney who represents you.

 

[adjusterjack]

So it does say my name on the contract "1. The parties agree that ---- ---- on Broker's behalf has procured for Owner a tenant." The part that's ---- ---- is my name.

OK, I didn't realize that. So, taking a second look here's what I see.

Your name is there but the contract doesn't assign you any duties or obligations.

The last paragraph of Section 3 doesn't appear to require payback of unearned commission if the tenant leaves during a lease year. It's poorly written, to the point of almost being incomprehensible.

I agree with Zigner, time to have it reviewed by a lawyer.

 

[Dave Bertram]

OK, I didn't realize that. So, taking a second look here's what I see.

Your name is there but the contract doesn't assign you any duties or obligations.

The last paragraph of Section 3 doesn't appear to require payback of unearned commission if the tenant leaves during a lease year. It's poorly written, to the point of almost being incomprehensible.

I agree with Zigner, time to have it reviewed by a lawyer.

Ok I thought we were lawyers here!

Anyways I removed my name completely from the contract. Would that solve all the issues here?

 

[Zigner]

Ok I thought we were lawyers here!

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Anyways I removed my name completely from the contract. Would that solve all the issues here?

What did your attorney say?

 

[Dave Bertram]

At the bottom of every page on this site:


Legal Disclaimer: The content appearing on our website is for general information purposes only. When you submit a question or make a comment on our site or in our law forum, you clearly imply that you are interested in receiving answers, opinions and responses from other people. The people providing legal help and who respond are volunteers who may not be lawyers, legal professionals or have any legal training or experience. The law is also subject to change from time to time and legal statutes and regulations vary between states. It is possible that the law may not apply to you and may have changed from the time a post was made. All information available on our site is available on an "AS-IS" basis. It is not a substitute for professional legal assistance. Before making any decision or accepting any legal advice, you should have a proper legal consultation with a licensed attorney with whom you have an attorney-client privilege. For purposes of New York and New Jersey State ethics rules, please take notice that this website and its case reviews may constitute attorney advertising.

What did your attorney say?

I dont have an attorney here

 

[adjusterjack]

Ok I thought we were lawyers here!

Some are, some aren't. It's like playing Russian Roulette. You get to guess which chamber is loaded with a lawyer and which isn't.

Anyways I removed my name completely from the contract. Would that solve all the issues here?

Might solve your issue. Can't say about the rest of them.

 

[Dave Bertram]

Some are, some aren't. It's like playing Russian Roulette. You get to guess which chamber is loaded with a lawyer and which isn't.





Might solve your issue. Can't say about the rest of them.

Lol that is mad funny!