Answers to Common Questions about Real Estate Commissions
If you are a party involved in a residential or commercial real estate transaction, you probably have questions and concerns regarding the broker’s commission payment. We at Rosenthal Law Group often see clients who have similar questions about this topic.
With that in mind, we’ve prepared the following answers to commonly asked questions to provide some answers you may be seeking. If you have a different question or perhaps one that pertains to your specific situation, we encourage you to reach out to us and schedule a consultation with one of our attorneys.
At Rosenthal Law Group, we strive to provide each client with the personalized and proactive legal assistance they need. When you work with us, you can expect our attorneys to invest time in learning as much about your legal situation and offer solutions tuned to help you reach the best possible outcomes.
Get in touch with our attorneys today by calling (954) 384-9200 or by submitting an online contact form.
Is a written brokerage agreement necessary for a broker to claim their commission?
It’s not required to have a written agreement to enforce an owed commission payment in Florida. Imposing a broker’s lien, however, does require such an agreement.
Although not required in Florida, parties should certainly consider entering into written brokerage agreements with their respective brokers. By doing so as soon as possible, unwarranted claims for commission payment can be avoided.
When can a broker claim their commission, and can they earn a commission if closing doesn’t happen?
Whether or not a commission is owed – and when it must be paid – can be contingent upon the specifications of the transaction and language of the commission agreement.
When a tenant or purchaser is ready, willing, and able to follow through with a transaction, the broker who procured them is entitled to their commission payment. There can be some uncertainty regarding when a buyer or tenant is ready, willing, and able, which means parties may be better served by entering into a commission agreement soon after beginning the process.
Does Florida law restrict commission rates?
No. Florida does not impose any restrictions on commission rates; parties may negotiate and agree upon any commission rate.
Is there a range for negotiated rates?
Market forces and individual cases determine negotiated rates, which can vary considerably from one county to the next.
Does the seller, landlord, or both pay the commission?
The responsibility of paying the commission can differ between counties and usually depends on the market and transaction type.
Customarily, the seller pays the commission during a commercial real estate sale. That said, parties can negotiate a separate arrangement, such as the purchaser paying the commission or the cost of which split between both parties.
When it comes to commercial leases, a landlord typically pays the commission. This, too, can be negotiated differently such that the cost of the commission is split between the landlord and tenant. Commercial lease commissions are often paid in increments and according to a schedule laid out in the commission agreement. Because of this, it’s advisable to carefully consider the broker agreement’s terms to prevent disputes concerning responsibility for the commission.
Is fee-splitting legal in Florida?
Florida allows fee-splitting, but limits splitting fees and commissions received by a broker to other licensed real estate brokers in Florida.