Can I pay an unlicensed attorney a cooperation fee?

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A man with several $100 bills in one hand and holding a $100 bill in the other

03/05/2015 | Author: Editorial Staff

An attorney told me her client attended an open house for my listing and wants to make an offer on the property. The attorney is preparing the offer for her client and insisted I pay her the same fees I had offered cooperating brokers in the MLS. The attorney doesn’t have a broker’s license. Can I pay her the cooperation fee if her client purchases the property?

No. The Real Estate License Act (TRELA) prohibits brokers from sharing fees received for services as a real estate agent with anyone not licensed as a real estate broker or salesperson in Texas or any other state. (See Section 1101.651, Occupations Code.) You would face disciplinary action for paying a cooperating commission to an attorney.

Although attorneys are exempt from the provisions of TRELA (see Section 1101.005, Occupations Code) and are permitted to represent clients in real estate transactions, attorneys must seek compensation for those services directly from one of the principals in a transaction.

See more legal questions and answers on texasrealestate.com.

Categories: Legal
Tags: legal faq, unlicensed attorney, cooperation fee


Comments

Stuart Scholer on 03/13/2015

In most residential transactions the Listing Broker is offering compensation, not the Principal.

Stuart Scholer on 03/13/2015

If you are the Listing Agent and the Buyer/Attorney wants the Buyer Agent compensation…..  You had better be sure your Client understands completely what is going on AND also approves. Might not be a bad idea to inform your Broker also. Broker might want an Intermediary Notice or some other additional disclosure(s) (although superfluous).

Joseph Tornberg on 03/13/2015

First, if an attorney is a principal in the deal, they would not take a commission, but discount the offer 3% and stipulate in the contract that no buyers agent commission is being paid.  Why would they want to pay taxes on a commission? 

Second, as an attorney, I got my agent license just to avoid this issue in dealing with agents that kept saying I could not have a commission or even discount my offer by the “buyer’s agent commission”.  Even though all agents, and even here, that line is always put forth, I believe it is incorrect.  Can anyone explain to me if an attorney can not collect a commission, how under TRELA they can then sue to collect it.  TRELA allows an attorney to maintain a liability action for not receiving compensation or commission when acting as a broker or salesperson in Texas.   

SUBCHAPTER Q. GENERAL PROVISIONS RELATING TO LIABILITY ISSUES
§ 1101.806. LIABILITY FOR PAYMENT OF COMPENSATION OR COMMISSION.

(b) A person may not maintain an action to collect compensation for an act as a broker or salesperson that is performed in this state unless the person alleges and proves that the person was:

(1) a license holder at the time the act was commenced; or

(2) an attorney licensed in any state.

Earnest Tipping on 03/12/2015

Buyer and Seller are the only two principles.  And no,  if a attorney is the buyer, you can not give them any part of your commission.

Ralph Buller on 03/12/2015

The Listing Broker is a principal in the listing agreement but you are neither the Buyer or Seller in the purchase contract.  Your signature is not required at the closing but the Buyer and Seller signatures are.

Lane Mabray on 03/12/2015

Jim Doyle,  a listing broker or sales broker is not a principal to the contract. Only buyer and seller are principals. At least that is what I have been told. So, yes you can give back to one of the principals as long as it is disclosed, but paying an atty who is not licensed for writing the offer, NO, you cant pay them a commission or pay their fee.

Ralph Buller on 03/12/2015

RE: non-broker attorney putting a monetary demand for services to buyerin Special Provisions does not effect contract between seller and listing broker/agent which has written commission agreement.  The attorney knows the law and a copy of the purchase agreement should be sent to the County DA for investigation.

Jim Doyle on 03/12/2015

Not sure I understand how this works.  As the listing broker, doesn’t that make me a principal in the transaction? If it does, why can I not compensate the attorney based on the last line of the answer:  “attorneys must seek compensation for those services directly from one of the principals in a transaction.”

Thank you.

Joe Lumbley on 03/12/2015

It’s legal for a broker to rebate part of his commission to one of the principals in the transaction, as long as it’s fully disclosed to all parties.

sherri Teepen on 03/06/2015

However, if the non-broker attorney writes in Special Provisions of the contract, that they will receive 3% of the sales price for services, it is my understanding that this is a loophole and is not a commission per se. Please help clarify.

Lane Mabray on 03/05/2015

What if the attorney is one of the principals, such as the buyer?


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The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

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