Real Estate Info: Commission Escrow Act
Real Estate Brokers and Agents-what happens when at the closing table your client decides they don’t want to pay your commission? What is the first thing that a Broker must do to be in compliance and how do you receive your commission?
For you newer agents or those agents that have not had this happen the Commission Escrow Act deals with residential properties, condos and Co-ops. It states “At the time of Closing, you[the client] may be required to deposit the broker’s commission with the county clerk in the event that you do not pay the broker his or her commission as set forth herein. Your obligation to deposit the broker’s commission with the county clerk may be waived by the broker.” (Refer here)
This act is to ensure and help realtors obtain their commission. Brokers should be aware of the right disclosures and forms that must be filled out prior to this situation even occurring. “: AT THE TIME OF CLOSING, YOU MAY BE REQUIRED TO DEPOSIT THE BROKER’S COMMISSION WITH THE COUNTY CLERK IN THE EVENT THAT YOU DO NOT PAY THE BROKER HIS OR HER COMMISSION AS SET FORTH HEREIN. YOUR OBLIGATION TO DEPOSIT THE BROKER’S COMMISSION WITH THE COUNTY CLERK MAY BE WAIVED BY THE BROKER. (3) The listing agreement should clearly state the address of the owners address. It is important that the address at which the owner resides is clearly identifiable simply by looking at the listing agreement. ” (LIBOR)
The How To:
-Broker must file Affidavit of Entitlement for Commission
-The Affidavit must be filed in the county clerk’s office of the county where the real property is located. The broker should bring at least four copies of the Affidavit and attached listing agreement, one for the county clerk to file, a copy for the seller, a copy for the seller’s attorney if applicable, and a copy for the broker. The broker should ask the clerk to stamp all four copies as proof of filing. (LIBOR)
If there are any questions, Refer to your broker or visit LIBOR to learn more!
-Realty Executives of New York