Is an agreement between brokers for a residential lease required for MLS offers of compensation?

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10/15/2015 | Author: Editorial Staff

I listed a rental property in the MLS and offered compensation to other MLS participants. Another broker who is an MLS participant saw my listing and submitted her client’s lease application to me. After the landlord accepted her client’s application and executed the lease, the broker told me I must sign the Agreement Between Brokers for Residential Leases. Do I have to sign the agreement?

No. An offer of compensation in the MLS becomes enforceable when the cooperating broker is the procuring cause. (Read more about procuring cause in this post.) No other agreement is necessary.

Some brokers find the Agreement Between Brokers for Residential Leases (TAR 2002) beneficial, since it specifies a time frame for payment, and covers compensation for lease renewals and sales. Still, an agreement between brokers is not required to enforce the offer of compensation specified in the MLS.

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Categories: Forms, Legal
Tags: legal faq, property management, leasing


THERESA AKIN on 10/21/2015

I never work without a Buyer/Tenant Representation Agreement. It’s there for a reason. First form is the IABS, then B/TRA. When it gets closer to the end of the lease, at about 3 months before, I send listings of properties that would be comparable to what their rent/lease payments are. I call to confirm they received my email then send another IABS and B/RTA. If they’re ready, they usually sign the forms after going over them over the phone or in person.  Also suggest they contact the financial entity or institution they will use for a mortgage loan.  I learned this the hard way with a broker I worked for and ended up having to pay my own broker a referral fee when I brought the tenant in the first place. My broker had the property my client leased. When it came time to end the lease they wanted to buy and contacted me. I was charged a 30% referral fee against my split. I ended up getting 40% instead of 60% and desk fee and E&O were also deducted out of the 40% so even less than that. Learned my lesson and moved on.

Tracey Collier on 10/16/2015

Thank you, that is valuable information! I will definitely fill my IABs forms out differently from now on. I work with a lot of renters.

Rick DeVoss on 10/16/2015

Well, first of all, there is a reason that TAR set up the form referenced above.  But the time to use it is BEFORE you submit a lease application to another Broker.  (If you want to negotiate the terms of your paycheck, you’d better do it before you give away the lease to the landlord.)
Many agents are so blase about the small commission they get for leasing a house, that they don’t think about what will happen a year from now, or when the “tenant” that you brought to the table decides to become the “buyer” for the house, and only the landlord’s broker will get paid!
So you are getting $300 for bringing the landlord a new tenant.  ~Why shouldn’t you get paid $300 next year when the tenant signs another 12-month lease??  (If the landlord had to go find another tenant, it would cost him more than $300, that’s for sure!)  Our up front agreement should include a percentage of the rent for the life of the lease agreement between THAT tenant and the landlord.  Leases are not one-time events, like buying a house.  Leases get renewed every year. and we should get paid for each and every contract between that tenant and that landlord.
If you represent a tenant, (just like you represent a buyer), then the tenant does NOT become property of the landlord’s Broker!  Too many Property Managers seem to think that THEY own the tenant just because they collect the rent and have regulatory control over the tenant’s actions.
But managing a property, and renewing a lease that the tenant has to sign and agree to all over again, are not the same thing!
When are we going to get serious about “representing” a tenant…?
They have to sign the IABS form, and they should sign a Buyer’s/Tenant’s Rep agreement as well.  And they are “Hands Off” to the Landlord’s Broker when the lease expires.

Too many Property Mangers do not understand the concept of “Tenant Representation” because they have never sold a house!



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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.

While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on Any legal or other information found here, on, or at other sites to which we link, should be verified before it is relied upon.

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