Commission dispute between Broker & Agent. What you need to know to protect yourself.
Are you really shocked your broker stole from you? You've watched the little weasel committing ethics violations, bribery, or fraud for years. Wondering how they plan to get away with it?
Read this article to find out what your options are and how to fight back. Best of all get your money! In the rare event, your Broker decided to stiff you for commission - don't panic! You'll learn there are a number of remedies to collect your money, and you may even have a bit of fun along the way.
Who is the Real Estate Broker?
Let's give this fantasy broker a physical appearance, behavior, and identity. Let's pretend it's a woman. And this woman is regularly agitated, discontent, and miserable. Or perhaps she's simply delusional, obnoxious and unstable. She regularly encourages inappropriate behavior sexual in nature in front of co-workers and clients. Some would say she's seen the bottom of too many bottles and resembles Ms. Peggy. Imagine what human sandpaper looks like. Do you have that picture in your mind? Okay, good! Now how about we name this grimy sack of shit Ms. Pig Vomit?
Welcome to the stage, Ms. Pig Vomit!
So the past year Ms. Pig Vomit has been drunk. She's been piling too much work on her plate, and the excessive daily boozing became dangerous and embarrassing. You've watched her pack on the pounds and make a fool of herself and her brokerage. She regularly slurs her words by 1 pm and hardly ever remembers her responsibilities. Worst of all she can't tell the difference between what's real and what's fantasy. As a result, she consistently gets in interpersonal disputes and legal trouble.
You're either walking on eggs shells and dog shit or just staying clear of her warpath. At the end of the day, you stayed working under her license for longer than you should have. You know it. But like a lot of people in toxic relationships, you had hoped the situation would just fix itself or her intolerable behavior would magically go away.
Let's pretend you stayed because you had complementary skill sets. You regularly agreed to split transactions either on the selling or listing side. As time marched on your patience for Ms. Pig Vomit wore thin.
You hoped she would have an attitude adjustment or seek professional help. Let's add another layer to this story. Perhaps you had a problem with drinking too. Maybe you got sober. Yeah, you got sober and Ms. Pig Vomit didn't.
As we all know, nothing makes an alcoholic more uncomfortable than a former drinking buddy sobering up. So the party was over. Ms. Pig Vomit was left on the dance floor alone. She resented you for that. You finally said, "enough is enough!" And told Ms. Pig Vomit what you thought of her! Maybe that wasn't the wisest decision of 2019.
The next thing you know Ms. Pig Vomit decides to cut you out of the real estate deal you're working on without cause. She spins a web of litigious lies and frivolous claims slandering you to your clients while simultaneously manipulating agents, clients, and co-workers against you.
Maybe you try to reason with her and even email her smoking gun evidence proving she is wrong and owes you the commission. Perhaps you wave the white flag. You do everything possible to convenience Ms. Pig Vomit to do the right thing. Honor the agreement then go your separate ways. Period.
Roll in the mud with pigs you're bound to get dirty.
It's important you take responsibility for your actions. Ms. Pig Vomit isn't your problem. How you deal with Ms. Pig Vomit is your problem. Most likely an easier softer way was available before it got to this point. Reflect a bit and learn from your mistakes.
Whatever the reason is that got you to this point, if you are rigorously honest with yourself, there must have been at least a handful of times you should have walked away long before you actually did.
Walk away or fight for justice?
So what are you going to do? If you have decided to walk away from your last paycheck dust off your pants and say c'est la vie. Do your best not get into a pickle like that again - keep the cutlery in the kitchen. The best revenge is staying successful, right?
But on the other hand, Ms. Pig Vomit should learn she can't steal from people. Maybe in the past, she's successfully stolen from agents and renovation clients. Perhaps she's even bragged about it! Maybe you know of a time she even committed fraud on the state of California. Perhaps you had perverse sexual encounters with her too. Do you have no shame? Do I have your attention? Any of these reasons would have been a red flag to resign and run as far away as possible!
Follow these steps if you decide to pursue legal action to collect your rightfully owned commission.
Steps to successfully put Ms. Pig Vomit in her place.
Step #1: Demand escrow holds the funds back. Don't let Ms. Pig Vomit get paid or you'll have a harder time collecting your money.
Retain an attorney to draft a letter to escrow. Demand the commission is held back. The last thing you want is for Ms. Pig Vomit to get paid money that belongs to you. If she gets her grimy paws on the cash you might as well kiss it goodbye. If she is as wicked as I imagine she'll dodge and weave or roll her drunk ass into the dog house to avoid you.
Step #2 File for meditation
Now that the money is safe. Take a deep breath. You've earned it. The California Association of Realtors has mediation available as an alternative to arbitration.
More than likely if you're dealing with a fraud or criminal they won't agree to mediation and it would be a waste of time. Regardless, it's in your best interest to take the proper steps and meditation is the first step.
What is mediation in real estate?
Mediation is a dispute resolution process whereby a mediator works with you and Ms. Pig Vomit to facilitate a mutually acceptable resolution of your dispute. In comparison to arbitration, mediation is usually less adversarial and less formal, and the parties are more directly involved in the decision-making process to resolve their dispute. It will cost you $400.00 to get the process started.
As a general policy, the Association promotes mediation and strongly encourages you to consider using mediation. This is good in theory but 9 times out of 10, if you're dealing with an unstable lunatic like Ms. Pig Vomit the likelihood meditation will be successful, is slim to none.
It's also smart to point out while the Association promotes mediation its a voluntary process and all parties must agree to a mediation conference. If Ms. Pig Vomit already has your cash who knows how long you'd be chasing her around for it. Make sense?
If meditation is a success - congratulations! You can now leave this hot mess behind you and move on to the next chapter of your real estate career. If it isn't you'll have to file for arbitration or an Interboard Arbitration if you and Ms. Pig Vomit belong to a different Realtor board than you. Let's keep it interesting and assume you're members of different boards. Hint.
Get $500.00 out of the sock drawer. You're gonna need it to file for the Interboard Arbitration.
Step #3 File an Interboard Arbitration
Below is a list of the most commonly asked questions when filing a C.A.R. Interboard Arbitration in California.
Are the rules for C.A.R. Interboard Arbitration different than those for local association arbitration?
No. The rules used to conduct C.A.R. Interboard Arbitration are substantially the same as those used by local associations.
What is the time frame to file a C.A.R. Interboard Arbitration complaint?
In order for C.A.R. to process an Interboard Arbitration complaint, the complaint must be filed with C.A.R. within 180 calendar days after the close of the transaction. Those days will click by quickly. Stay on top of this process or Ms. Pig Vomit may get away with committing illegal activity.
Is there a fee to file a C.A.R. Interboard Arbitration complaint?
Yes. The current filing fee is $500.00. I spoiled this one earlier.
Can I recover my filing fee if I prevail in the arbitration?
It depends. All parties to a C.A.R. Interboard Arbitration may request the hearing tribunal to award them certain costs related to the arbitration, including the filing fee. However, whether a party will be awarded costs is at the discretion of the hearing tribunal.
Is the filing fee refundable if the complaint is later withdrawn?
Yes. If the complaint is withdrawn, C.A.R. will refund the filing fee less $250. After a hearing occurs, the entire filing fee is non-refundable.
Okay, so I filed my complaint, what happens next?
Once your complaint is properly filed with C.A.R., C.A.R. notifies Pig Vomit (the respondent) by sending her a copy of the complaint and all the supporting documentation you submitted with the complaint. Pig Vomit will have fifteen (15) calendar days in which to submit a written response if she chooses. If a written response is filed with C.A.R., C.A.R. will send a copy to you.
Before a hearing is scheduled, all parties will be sent a list of potential arbitrators, a form to challenge any arbitrators from the list, and a form asking the parties for their availability for a hearing.
If the parties have any challenges to potential arbitrators or are not available on any days during the time frame anticipated for scheduling the hearing, they must complete the appropriate forms and return them to C.A.R.
Challenges to potential arbitrators must be for cause and the reasons for the challenge must be set forth in writing. After the time frame to submit challenges to arbitrators and to give notice of availability for the hearing has lapsed, C.A.R. selects a panel of arbitrators, called the “hearing tribunal,” and schedules a hearing for the dispute.
It's important to let you know you'll have a legal assistant from C.A.R. Corporate Legal assigned to your complaint. That person will keep you up to speed via email. You'll also have an online portal to upload and download information. It's a fairly organized process.
How long does it take for a complaint to get to a hearing?
I hope you're not in a hurry. You won't be able to nail Pig Vomit to the wall for a while. Usually, it takes three to six months after you file with C.A.R. However, depending on a variety of factors, such as whether continuances are requested and granted, and the availability of the parties and arbitrators, it may take longer for you to be heard.
Where is the arbitration hearing held?
C.A.R. Interboard Arbitration hearings are heard at local associations where none of the parties hold membership.
Who are the arbitrators that hear and decide the arbitration?
The arbitrators who hear and decide C.A.R. Interboard Arbitrations are REALTORS® who serve, or have served, as arbitrators at their local association and have qualified to serve as C.A.R. Interboard Arbitration Arbitrators.
How are the arbitrators selected?
Prior to the hearing, C.A.R. will send a list of potential arbitrators to you and Pig Vomit. The potential arbitrators have no common association membership with either of you. Each party may submit challenges to potential arbitrators on the list within fifteen (15) days from the date the list was sent. Challenges must be for cause, with the reasons set forth in writing. C.A.R. selects three or four unchallenged arbitrators from the list to serve on the hearing tribunal.
How is the hearing conducted?
The hearing process is similar to that of an arbitration hearing at a local association of Realtors. Each party first makes opening statements. After opening statements, first, you (the complainant) and then the Pig Vomit (the respondent) present your cases.
Each of you may call witnesses and the other parties have the right to cross-examine any witness called by the other party. After the conclusion of the parties’ cases, each party makes a closing statement to the hearing tribunal. Then, the hearing panel dismisses the parties from the room, goes into deliberation and renders an award based
on the evidence and testimony presented at the hearing and arguments made by the parties. The award is then sent by C.A.R. to the parties.
Expect seven (7) to ten (10) days before you receive the arbitration award if any. In the event, you receive the award sooner than seven days and it's in your favor clearly everyone in the room knew Pig Vomit was guilty.
Can I be represented by legal counsel at the hearing?
Yes. Fundamental to due process is the right to be represented by legal counsel. Any party to a C.A.R. Interboard Arbitration may be represented by legal counsel at any time during the arbitration process. If a party does retain legal counsel to represent them at the hearing, that party must provide written notification to C.A.R., all other parties and the hearing tribunal at least fifteen (15) calendar days prior to the hearing.
If a party fails to comply with this notice requirement, the hearing tribunal may grant a continuance and the party will be responsible for the continuance fee and other costs associated with the continuance.
Can someone other than legal counsel represent a party at a hearing?
No. However, a party may authorize a nonlegal representative to be present at the hearing on his/her behalf, e.g., office manager, authorized agent, etc.
Can a family friend or relative attend the hearing with me?
No. Only named parties and their authorized representatives are allowed to be present during the hearing. Witnesses can also be present at the hearing, but only while testifying.
Can the decision of the hearing tribunal be appealed or reviewed by C.A.R.?
Yes, but only on very limited grounds. Under the California Interboard Arbitration Rules, any party may request a “Director’s Review” of an award but the basis for such review is limited to allegations that a lack of due process occurred during the hearing process, e.g., a party was given improper notice of the hearing, not allowed to present all relevant evidence and testimony at the hearing, etc.
The review is not a rehearing and should not be used in an attempt to have the merits of the dispute reconsidered.
Will the hearing tribunal provide the basis for their decision?
No. According to the Code of Ethics and Arbitration Manual provided by the National Association of REALTORS®, arbitration awards, unlike ethics decisions, do not include findings of fact or rationale.
“… While the question of whether arbitration decisions should include findings of fact has been discussed by the Professional Standards Committee on several occasions over the years, the Committee has consistently held that any possible educational benefits are far outweighed by the possibility that a proliferation of local association “arbitration case law” might quickly come into existence and that hearing panels would come to rely on these local determinations as the basis for subsequent arbitration awards instead of looking at each disputed transaction in its totality. It is for these reasons that the policies and procedures in the Code of Ethics and Arbitration Manual do not contemplate that written or oral explanations or rationale or “findings” will be part of arbitration awards rendered by hearing panels of associations of REALTORS®.”
Step #4 File an Ethics complaint to Ms. Pig Vomit's Association of Realtors.
Congratulations! If you made it this far you must have been given an award from the tribunal. You've been vindicated! Once the ether wears off from your win, you have the choice to either collect your award and walk away or file an ethics complaint.
Look, I'm at a place in my life I'd walk away and not file the ethics complaint. It's not worth it to me. Frankly, Ms. Pig Vomit doesn't need your help digging herself in a hole. After your dispute is wrapped up and you get paid she'll find something else to latch her toxic focus on. Anyway, if Ms. Pig Vomit wouldn't honor the award or drags out the inevitable, I'd probably nail that fraud to the wall!
Besides, if you don't file the ethics complaint you're basically telling every Ms. Pig Vomit out there that it's okay to steal from their agents. You have a duty to file a complaint against your broker. Ms. Pig Vomit needs to learn a lesson. So go for it and have fun along the way!
Be prepared for a rainy day in real estate.
Most of us real estate sales professionals bring home a paycheck only when we procure a successful transaction (sell real estate). Sometimes we work our tails off and deals fall apart for a number of reasons. All of them outside of our control. The first rule of real estate: Save for a rainy day.
Live within your means. It's inevitable you're going to have good years and not so good years. Have at least six months of reserve cash on hand. That means if your monthly reoccurring bills are $15,000.00 you should have $90,000.00 in your sock drawer. I'm not talking about your mutual funds, 401k, IRA, or individual stocks. I'm talking about low interest-earning cash ready to pay the bills.
Don't be that agent who's desperate to close escrow so you can put food on the table. Remember your fiduciary duty is to your clients and all third parties in a transaction. Put them first and do the right thing. The business will come your way.
I hope this article has been informative, encouraging, and you had a bit of fun. Don't give up. If you are a licensed Realtor in the state of California who happened to get into bed with a wolf in sheep's clothing don't hesitate to reach out to me for advice. It's sometimes hard to see the forest from the trees. I've been there!
Take meetings with new firms. Shake up your business. Think outside the box. There is plenty of opportunities waiting for you! Reach out to me anytime. I'd be more than happy to help you navigate the waters towards your deserved commission.
All characters and other entities appearing in this work are fictitious. Any resemblance to real persons or other real-life entities is purely coincidental. ... Any resemblance to real persons, dead or alive, or other real-life entities, past or present, is purely coincidental. This article is not intended as a substitute for legal advice from an attorney. The reader is encouraged to consult an attorney in matters relating to his/her situation. The author is a licensed real estate broker not authorized to give legal advice.