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My former broker reduced my commission

By Joel Maxson
 

Aug. 7, 2017 – Question: I am a sales associate who switched real estate companies a few months ago. I thought everything was in order, but when my former broker gave me a check for one of my transactions, the amount did not match the agreed upon split we had when I worked there. My former broker can't do this to me, can he?

Answer: It generally depends on the terms of your independent contractor agreement, although additional office policies and procedures could also come into play.

An independent contractor agreement is a contract between a sales associate and real estate company. It could be a verbal agreement, but most are written and signed when an associate first begins working for a company. The terms of this agreement can vary from one associate to the next, even within the same company, so it's vital to read the actual contract to find out what rights each side has. Florida Realtors provides a form independent contractor agreement, form ICA-6, which we will examine as a sample, but beware: Many companies use their own form, and it could be wildly different from this form.

Florida Realtors' ICA-6 addresses compensation after termination of the agreement in Section 3(c)(6), which provides that "After termination of this Agreement, Broker will pay Associate any amount earned before termination less amounts owed to Broker and amounts Broker must pay another licensee to complete pending transactions for which Associate was responsible before termination." Under this clause, the associate can demand earned commission, but it might not be the full amount the associate would have received if the associate still worked for the company. The broker is entitled to deduct the former associate's debt to the company, as well as a reasonable amount to pay another licensee who helped close the deal after the associate left.

So, what can an associate do if the independent contractor agreement demonstrates the associate is entitled to commission but the broker refuses to pay? The short answer is that the next step is to sue, typically by hiring a lawyer for representation.

Associates are often disappointed to hear that the Florida Real Estate Commission (FREC) won't immediately intervene on compensation issues like the one discussed above because Florida Statutes 475.25(1)(d) requires the associate to first win the case. If a civil judgment awarding a share of a real estate commission has been obtained and the broker still refuses to pay, however, it would be the correct time to file a FREC complaint.

Please note: This article is just a broad-brush picture, so members working through this issue (brokers and associates alike) should consult a lawyer as soon as possible to get a firsthand opinion of the strengths and weaknesses of their prospective case.

Joel Maxson is Director of Member Legal Services

© 2017 Florida Realtors®

 

Related Topics: Florida Realtors Legal News