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What does “The Broker Owns the Listings” Mean, Exactly?

Who is “the broker”? That word could refer to a brokerage firm or the individual who manages the firm’s business. To fully understand legal rights under a listing agreement, it’s important to understand the difference.

ORLANDO, Fla. – Most members are familiar with the phrase “the broker owns the listing,” but there’s some nuance to that statement that often a source of confusion for some members.

The confusion seems to come from two sources. The first is that the word “broker” can refer to either the real estate company or the person (or people) who hold the title broker inside that business entity. The second is that, although associates may be the focal point of a transaction, there are strict limitations to how much power they can wield on behalf of a company.

Who are the parties to a listing contract? One party is the property owner (whether a seller or landlord). The other party, which is referred to as the “Broker” throughout the listing agreement, is the real estate brokerage firm (typically a corporation, LLC, or partnership). In rare circumstances, you may encounter a broker who operates as a sole proprietor. Sole proprietor is a fancy term that just means the individual doesn’t have an entity, so the “Broker” in that case would simply be the person who holds a broker’s license. But assuming this is a real estate firm, as it almost always is, the business entity is what we mean when we say “the broker owns the listing.”

Understanding this concept can be helpful in several scenarios. What if a broker, who is the sole member of an LLC, passes away? The listings still belong to the brokerage firm, which will have an opportunity to appoint a temporary broker to manage the business, assign the listing to another firm, or take other steps to dispose of its property.

What happens if there are two brokers who run a brokerage firm as a partnership, but one decides to leave? Since the listings belong to the partnership, the departing broker would need to look to the partnership agreement to see what rights, if any, he or she has to those listings. What if an unlicensed person is the president and owner of a real estate corporation, while the broker just has a seat on the board of directors? The unlicensed person would likely control what the brokerage firm does with the listings, while the broker would look to corporate documents to see what rights if any, he or she has to the listings.

What about sales associates or broker associates? We often hear associates use phrases like “my listing” or “my client,” but as we’ve discussed, those loose phrases aren’t accurate. It’s the brokerage firm’s listing and the brokerage firm’s client. The associate’s rights, if any, will come out of the independent contractor agreement he or she has with the brokerage firm.

An independent contractor agreement could say anything, but many provide that the brokerage firm keeps the listing after an associate is no longer affiliated with the firm, while the associate will be paid for work done prior to leaving (minus debts owed to the firm and a reasonable amount owed to a new licensee to finish out the transaction).

Finally, what happens if a property owner chooses to do something wrong, like not pay a commission due under the listing agreement? You should know by now that it would be a decision for the brokerage firm, which could sue, settle, or let the matter go.

Any member who has questions about this topic are welcome to call the Florida Realtors Legal Hotline at (407) 438-1409 between the hours of 9:00 a.m. and 4:45 p.m. on weekdays.

Joel Maxson is Associate General Counsel for Florida Realtors

 

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