Real Estate Brokers in Florida are winning many legal battles over their rights to keep their commissions that were paid to them by developers.
The developers are in a bind because buyers have been rescinding their contracts on new condos. Most of these luxury condominium projects were being marketed to real estate brokerages. The developers offered commissions up front and at different intervals during the contract period.
Developers offer all kinds of commission incentives to brokers. Most of the time the incentive is that at the signing of a contract and clearance of deposit you could get half of your commission and the rest at closing. They also run marketing that includes getting (example) 1/3 at clearance, 1/3 at removal of all contingencies and 1/3 at closing. Mercedes Benz, Trips abroad, Cruises and Jewelry are a part of many marketing strategies builders and developers use.
Well, after the buyers started to back out of their contracts because of the turn down in values on these unbuilt projects the developers began to sue the brokerages to get the commissions back. So I wonder do they want the brokers to also refund the value of a cruise you already went on?
There was a problem with that. The biggest problem the developer faces in trying to get the commissions back is that they are keeping the buyers' deposits and they do not want to give the buyers' their deposits back. You really can not have it both ways, well, not at least in the eyes of a judge.
The other problem with developers doing this is the real estate brokers will then be leery to bring their clients to their developments because there is a lack of assurance that they will be able to keep all of their commissions. The last thing a developer needs right now is for any Real Estate brokerage to be on their bad side.
One developer based in Miami filed suit against some brokerages to get $400,000 returned to them earlier this year. Most of the cases have been dropped or settled amicably.
We always read the fine print on each of these incentives. According to most of the brokers there was not a provision for the buyer backing out of the deal. If the developer keeps the deposit and the buyer forfeits their deposit, the brokers have every right to keep their commission.
We have a clause in our listing agreements that if a buyer defaults we retain 50% up to our commission of that deposit. Sellers understand that we are running a business and have business expenses. The last one where a buyer just did not show up for closing, our sellers were more than happy to compensate us for our expenses.
Katerina Gasset, CIPS, Realtor ®, Business and Life Coach, Speaker and Author. Reach Katerina at: 561-753-0135
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