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Commission Disputes with Sales Associates

Posted on: January 7, 2013

An experienced real estate lawyer will be able to counsel brokers on how to avoid liability and anticipate potential problems in order to avoid expensive disputes. Commission disputes may arise between a broker and sales associate. The Florida Real Estate Commission (“FREC”) does not resolve these matters. A written employment agreement or independent contractor agreement (“ICA”) between the broker and sales associate will commonly be the controlling factor in determining how to resolve a commission dispute. Having a skilled real estate lawyer draft an ICA protects the interests of brokers.

A broker may make a sales associate sign an ICA as a condition for placing his or her license with the broker. A sales associate’s ICA should contain the amount of the sales associate’s commission split, when commission is earned, the timeframe the broker is obligated to pay the sales associate, the broker’s rights to deduct from the sales associate’s compensation, and a provision for dispute resolution. The dispute resolution provision may provide for mediation or arbitration; however, omission of a dispute resolution provision can lead to costly litigation. If no dispute resolution provision exists, then a sales associate may elect to file a civil lawsuit.

When a civil suit is filed, the existing office policy manual, past business practice of the broker, industry customs, and any verbal agreement between the parties that can be shown to exist are factors in determining the outcome. If the civil suit judgment is in favor of the sales associate for a disputed commission, then the broker must pay the award within a reasonable time. A broker who fails to pay the judgment in a reasonable time faces discipline from the FREC when a complaint is filed by the sales associate for non-payment (Fla. Stat. § 475.25(1)(d)).

By hiring an experienced real estate lawyer to prepare and draft contracts, brokers are better able to avoid commission disputes with sales associates. At Schecter Law, should any disputes result in litigation we are fully prepared to prosecute or defend your claim through our extensive litigation practice. Schecter Law also represents real estate brokers and agents before all Florida administrative agencies, including the FREC.