Commission disputes between agents often arise in real estate purchase transactions, particularly those that involve ancillary agreements. This can occur when agents agree to split the commission on a listing or to share the buyer on an open house. When these deals are agreed upon orally, and even sometimes when they are memorialized in writing and subsequent interpretation conflicts transpire, it is important to have a protocol in place to resolve these disputes. There are a number of preventive measures that can address such matters before they result in litigation.
The disputes that occur between agents over commissions often focus on who is the procuring cause agent in the transaction. The procuring cause agent is identified as the agent who ultimately leads the buyer to purchase the property and is entitled to the commission. Establishing the procuring cause agent, however, is not always straightforward. Different agents might have played a role in the buyer purchasing the property by showing the home, presenting the offer and negotiating with the seller. Realtor associations have individual rules and policies to determine the procuring agent in a relationship.
The first step in avoiding disputes over the definition of procuring cause, as well as other monetary conflicts between agents, is to inform and educate clients about the process of real estate purchase transactions. For example, buyers should be advised to contact only their own agents to see a property and not to share information with other agents. If agents decide to work collaboratively in some type of arrangement, they should put that transaction into writing.
Many brokers maintain policy manuals that address situations of conflict. Specifically, broker manuals often have arbitration policies in place to handle disputes between agents from different firms if they cannot otherwise resolve the matter. State and local associations offer mediation and arbitration as possible alternatives to address disputes, but all parties must agree to submit to dispute resolution voluntarily. If the agents cannot come to an agreement over the commission allocation, the local civil court may have jurisdiction over the dispute and could render a decision in the case.
The experienced team of attorneys at the Law Offices of Mark Weinstein, P.C. can help you litigate your real estate claims. Contact Mark Weinstein and his colleagues at (770) 888-7707 or visit them at https://www.markweinsteinlaw.com to find out how they can advise you.