Commercial Real Estate Sales Commission Lien Act
Part 3 of Florida Statutes Chapter 475 codifies the Commercial Real Estate Sales Commission Lien Act (hereinafter sometimes referred to as the “Act”). The Act provides that when a broker has earned a commission by performing licensed services under a brokerage agreement with you for the sale or purchase of commercial real property, the broker may claim a lien against your net sales proceeds for the broker’s commission. The broker’s lien rights under the act cannot be waived before the commission is earned. See Florida Statutes § 475.703(1) (2012). Although often times the word “lien” conjures up an encumbrance upon real property, the Act specifically provides that the lien upon the property owner’s net proceeds for a broker’s commission is a lien upon personal property, attaches to the property owner’s net proceeds only, and does not attach to any interest in real property. Id.
A broker is required to disclose to the property owner, at or before the time that the property owner executes a brokerage agreement, that the Florida Statutes create lien rights for a commission earned by the broker that are not waivable before the commission is earned. Should the broker fail to make such a disclosure, then the lien shall be unenforceable.
If a broker wishes to enforce a lien for a commission pursuant to the Act, the broker is further required, within 30 days after a commission is earned by the broker, and at least one day prior to the closing, to deliver a statutorily proscribed commission notice to (1) the owner of the commercial property as specified in the brokerage agreement; and (2) the closing agent designated to close the transaction, where the identity of the closing agent is known (if the identity of the closing agent is not known, but later discovered, then the required notice is to be sent to said closing agent within 3 days after acquiring such knowledge and at least 1 day prior to the closing). See Florida Statutes § 475.705(3) (2012).
Should a broker fail to deliver a copy of a commission notice within the statutorily proscribed period, as required by the Act, then the broker shall not be entitled to enforce the broker’s lien, unless the broker’s failure to deliver said notice is solely because the owner entered into a contract for the disposition of the property without the knowledge of the broker. See Florida Statutes § 475.705(3) (2012). In such a case, the broker may then enforce the lien for a commission if (1) a copy of the commission notice is delivered to the owner and the closing agent before the closing agent disburses the owner’s net proceeds; and (2) the broker executes and delivers to the closing agent a sworn affidavit stating that the copy of the commission notice was not delivered within the time period specified in the Act solely because the owner entered into a contract for the disposition of the commercial real estate without the knowledge of the broker. See Florida Statutes § 475.705(4) (2012).
The Act is only applicable to commercial real estate. For purposes of the act, the term “commercial real estate” has a limited definition, and is defined as a fee simple interest or other possessory estate in real property, except an interest in real property that is: (1) improved with one single-family residential unit or one multifamily structure containing one to four residential units; (2) unimproved and the maximum permitted development is one to four residential units under any restrictive covenants, zoning regulations, or comprehensive plan applicable to that real property; or (3) improved with single-family residential units such as condominiums, townhouses, timeshares, mobile homes, or houses in a subdivision that may be legally sold, leased, or otherwise conveyed on a unit-by-unit basis, regardless of whether these units may be a part of a larger building or parcel containing more than four residential units. See Florida Statutes § 475.701(5) (2012).
Nevertheless, it is worth noting that a real estate broker may place a lien on your real property for a commission earned, in either a residential or commercial real property transaction, where you have specifically agreed in writing to same, for instance, in a listing or breakage agreement.