Avoid Legal Battles over Broker Commissions
Below is a MRR and PLR article in category Finance -> subcategory Real Estate.
Avoid Legal Battles Over Broker Commissions
Introduction
To avoid legal disputes, it's crucial for both owners and brokers to clearly define the terms of their agreements. This proactive approach is the most effective way to prevent litigation.Importance of Clarity in Agreements
Broker commission agreements often use standard forms, with the commission formula subject to change while terms and conditions remain consistent. However, these terms can be overlooked once the agreement is signed. Given that a broker’s income depends on these agreements, attention to detail is crucial for all parties.Lessons from Recent Lawsuits
Recent legal cases have highlighted the consequences of neglecting commission agreements. For instance, a Detroit building owner was required to pay a commission due to an agreement lacking an expiration or termination date. Although the owner claimed there were prior verbal agreements, the judge ruled based on the written contract.Importance of Clear Language
Legal professionals and juries aren't real estate experts. Terms like "procuring cause" might be well-known in the industry but mean little in court. Ensuring the language is clear and precise is essential, as judges will not alter contracts for poor decisions.Ongoing Attention to Agreements
After a commission contract is negotiated and signed, it shouldn't be forgotten. Parties cannot claim ignorance of the agreement later on. Key terms, especially those related to performance, compensation, and termination, must be diligently noted.Nationwide Legal Environment
Legal disputes over broker commissions are not confined to one area. Across the country, judges are reluctant to add terms to contracts or excuse parties from obligations. There has been an increase in disputes, some settled out of court, while others proceed to litigation.Conclusion
To prevent these issues, brokers and owners should dedicate time and effort to crafting comprehensive agreements and adhering to them. This is the most effective method of avoiding legal disputes.Good luck!
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