A brief guide to real estate commission cases

On Behalf of | Sep 15, 2022 | Firm News

In Florida’s bustling real estate market, potential buyers and sellers have two different options when it comes to their real estate transactions. They can either do business through an independent real estate agent, or they can choose to go through a larger, more well-known broker. Each path has its pros and cons from the consumer perspective, but what about the agent? What happens when a real estate broker refuses to pay out the commission to an agent who’s earned it?

The role of the broker

How does a broker differ from an individual real estate agent? Think of the broker as an umbrella. Large-scale real estate brokers have numerous agents that work directly for them, almost always on a commission basis. In turn, those brokerage houses generate business at scale, providing leads and caseloads to their individual agents.

Often, a real estate brokerage firm will invest in a particular type of real estate, be it commercial property, industrial property or undeveloped land. From the perspective of the agent, this can be highly beneficial, but what happens when the broker refuses to pay you the commissions you’ve rightly earned?

What happens if a broker refuses to payout a commission?

Fortunately, there is a subset of Florida law designed to handle this very type of scenario. If the broker that you work for fails to payout what they owe, you can petition the court to make a civil judgment against that broker.

While many agents may be tempted to take their grievance to the Florida Real Estate Commission (FREC) as a first step, they should first seek relief from the court itself. One word of warning before taking your case to civil court: make sure there is nothing in your contract with the broker that might preclude you from launching a civil suit, or seeking alternative relief through arbitration.

It should be noted that FREC is your last option should the broker still refuse to pay. You can then make a complaint that may affect the brokerage’s licensure.

What happens if the seller refuses to pay?

Let’s take a brief look at the other side of the coin. What happens if the selling party refuses to pay commission to the agent? In this case, the broker itself must seek assistance from the courts. Unless the service agreement between the two parties contains additional legal recourse, the matter is ultimately between the broker and the courts.