Hank's Blog

Commissions: No Lien Necessary

Hank Sorensen (Law Offices of Henry Sorensen) — Sun, 08 Apr 2007 21:46:42 -0500

In a little-reported Miami court decision from 2003, a court allowed a commercial broker to impose a contructive trust against seller's proceeds from a sale in order to secure payment of a commission. The foregoing was done without any reliance on the commission lien rights granted under Florida statutes (as the commercial sale lien law was not enacted until a few years later). In granting an injunction telling the closing agent to hold the funds after closing, the court focused its reliance on the following sentence in the broker's listing agreement:

All fees will be paid by a method acceptable to broker out of sale proceeds as a line item on the closing statement.

Use of the foregoing sentence in a broker's listing agreement created a separate, segregated and identificable fund aainst which the fund whih the court found could be subject to the closing process, even though the closing had not yet startedBefore and after this decision, some people have relied upon the language from the commercial sales lien law (which allows a lien against sales proceeds, but not the property) or Section 475(1)(j), Florida Statutes, which allows a broker (residential and commercial) to lien a property (but not the sales proceeds). However, both of these statutes require the broker to get express consent from the property owner as to the ability to sercure a lien against the property. However, use of the above language effectively funtions in the same manner, and no notification requirements exist. Therefore, if brokers put the langage from the Miami case into their listing agreements, they will be better protected.

lease options

Hank Sorensen (Law Offices of Henry Sorensen) — Tue, 01 Aug 2006 20:34:25 -0500

With a market that is rapidly increasing in invetory, I've written more lease/options in the past two months than I have in the past two years. I'm seeing a problem recurring through these.

The lease periods are running for 12-18 months (in one extreme case, 3 years), and the parties are executing a contract with a definitive purchase price at the inception of the lease. For the listing agent, they would do well to insert a provision after the purchase price that says "or appraised value, whichever is higher". For a buyer's agent, the converse would hold. If the contract is not contingent on financing, one of the parties would need to agree in the contract to fund an appraisal within 30 days of the closing date which would be binding on the parties.

I just see scenarios happening 12-18 months from now where sellers are pissed that they are leaving $50,000 on the table because they made a bad deal a year previous, and I know who is going to hear about it... :)

Full Price, All Cash, No Contingency Offers

Hank Sorensen (Law Offices of Henry Sorensen) — Tue, 01 Aug 2006 20:22:28 -0500

While these may have been more plentiful in the past few years, it still occasionally happens that a full price offer will come in, which financing either checked as "all cash" or consistent with the terms of the MLS (e.g. conventinal financing allowed). If the offer also has no contingencies other than those expressly permitted by the MLS or outside of industry norms at the time the offer is presented, you may as a selling realtor be entitled to a commission if the seller refuses to execute the offer.

I have been successful recently in pursuing cases on behalf of selling brokers against sellers where the seller refuses to sign. The theory in court is that MLS is nothing more than an employment agreement, and that the selling agent has satisfied the terms of employment when an offer is brought in, whcih is in accordance with the MLS terms and industry standards. I've had three cases like this: in two the seller signed off ont he offer after I filed the complaint in court, and on the third, the seller paid the selling agent almost their full commission and then re-listed the house at a higher price. I wonder if the selling agent on the third deal then sold the buyer another home and ended up with two commissions, hmmmmmm?

Just letting you guys and gals know so you don't leave money on the table after fully performing.