Legal Question in Real Estate Law in California
Hello,
This is a long one...My company is currently in a commission dispute. I am the listing agent on a property in California at a 6% total commission to be split with a cooperating broker. At the time of the original offer the agent submitted his offer under "Company A." The offer was accepted a month later and the agent told me he now worked for "Company B" because "Company A" was no longer in business. In negotiations the buyer selected escrow. I checked the DRE website a week later and the agent still had not affiliated with a broker, DRE clearly states a real estate salesperson is not to perform real estate work when not affiliated with a broker. I advised escrow and the agent. I did not look into it again. The business day before we recorded my company checked the agent's status and he still had not affiliated himself with a broker. My company revoked authorization to pay "Company B" on the basis the agent was not affiliated to a broker so "Company B" cannot claim a commission. The agent then affiliated himself with "Company B." My company still refused to split the commission. The agent then asked us to pay "Company A", the company out of business, upon further research it was discovered "Company A" was out of business more than two weeks before the offer the agent wrote, citing "Company A" as his broker.
Escrow is now refusing to pay any of the commission to my broker under the instruction of the selling broker, "Company B", even though we are the listing company, I am licensed as is my company. I am desperately in need of the commission because of medical issues but my company does not want to let it go stating they would be in violation of DRE regs/laws by authorizing payment to "Company B."
Has anyone else experienced a situation like this? Do you believe my company is legally right in revoking the authorization to pay "Company B"? How long for a resolution?
Thanks for your help and insight.
4 Answers from Attorneys
I do have experience in situations like this. I dont completely understand your facts. Please send me an email to set up a time for a consultation.
Best,
Daniel Bakondi, Esq.
415-450-0424
The Law Office of Daniel Bakondi, APLC
870 Market Street, Suite 1161
San Francisco CA 94102
http://www.danielbakondi.com
IMPORTANT NOTICE: This communication may contain confidential information, privileged information, or attorney work product. If you are not the intended recipient or received this message in error, any use or distribution of this message is strictly prohibited and unlawful. Please notify the sender immediately, and delete this message. No attorney-client nor confidential relationship is created through this communication. Nothing communicated or provided constitutes legal advice nor a legal opinion unless it so specifies and written agreement for attorney services has been entered into. Attorney licensed in California only. Your issue may be time sensitive and may result in loss of rights if you do not act in time. Thank you.
Regardless of the intricacies of the dealings and positions of the parties, your remedy is either walk away or to bring legal action on the commission, if you can't negotiate resolution. Commission and escrow disputes are not 'rare' and are governed by straightforward DRE rules. If serious about pursuing this, feel free to contact me to discuss.
First, there probably won't be a quick resolution to your issue. Second, doesn't the DRE have Arbitration in situations such as this to get the matter resolved?
BARRY BESSER
www.besserlaw.com
From what you relate, it appears that company B is claiming to be the buyer's agent.
Sellers are rarely require to pay a commission to the buyer's broker. Such a commission would only arise where there was a written agreement between the seller and the buyer's broker that satisfies the statute of frauds, or a the sller opened a subagency relationship through a listing agreement.
From what you relate, none of these two scenarios apply to company B. You may have had a cooperating listing agreement with Company A, but as you point out, Company A is defunct. I'm not sure from your post what the licensing status of Company A is, but a valid license is required as a prerequistie to receiving compensation. (Bus. & Prof. Code, sects. 10130 and 10136.)
A broker must be licensed at the time the right to compensation arose. A broker is entiteld to compensation where the license lapse at time a buyer was procured, but the license was reneewed before the sale was consummated. (Estate of Lopez (1992) 8 CAl.App.4th 317, 324.) Compensation was barred, however, when a broker had no license at the time brokerage serveds were performed and the sale was consummated. (Davis v. Chipman (1930) 210 Cal. 609, 621-623.)
The escrow company's position is dubious. The terms of the escrow instructions usually govern, and when the escrow company receives conflicting demands, they should interplead the funds and allow your company and Company B to dispute it in court.
Related Questions & Answers
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
