What fees you may owe a terminated agent

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Two hands portioning $1 bills into three stacks

09/17/2015 | Author: Editorial Staff

I’m a broker and I recently terminated the services of one of my agents who signed the TAR independent-contractor agreement. Which fees should he receive upon termination?

You owe him any fees earned before the termination was effective.

The Independent Contractor Agreement for Sales Associate (TAR 2301) outlines the rights of the broker and agent concerning earned fees upon termination of agent sponsorship. According to Paragraph 16C of the contract, an agent’s fees are earned at the time a broker's fees are earned under the applicable agreement for brokerage services—unless the fees are subject to arbitration or litigation. Each brokerage agreement defines when a broker's fees are earned. Generally, a broker's fees are earned when contracts or leases are fully executed.

Paragraphs 16G and 16H address the issue of fees payable to the departing agent if prospects are reassigned to another agent to complete a transaction. The parties could agree to other rules regarding this fee sharing, but a different agreement should be in writing to prevent disputes.

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Categories: Legal
Tags: brokers, fees, independent contractor, termination


Margaret on 09/17/2015

What about leases and how long of a duration? For instance., a property management agreement and renal agreement were procured by an agent doing property management. The agent is terminated immediately but the agreements are still in effect. Is that agent entitled to that commission and for how long?

The answer to all of these questions are in the co on 09/17/2015

The answer to all of these questions are in the Independent Contractor Agreement plus the Statement of Understanding Agreement you signed with your Broker. In the event this reminded you that you did not sign such agreements or may not have addressed all issues than now is the time to go back and rectify the situation.

Mark Eberwine on 09/17/2015

Based on the TAR response, it would seem that a Broker could terminate a sales agent, and keep all of the agent’s listings and pay zero $ to the agent.
Next up…
The broker could terminate an agent who has 10 listings under contract and must pay the agent his percentage of the commissions on each executed Contract.
So…does the Broker have to immediately pay the Agent those commissions upon termination?  After all, they are already earned by virtue of the executed Contract. 

Jean Chen on 09/17/2015

How about new house contract signed with the builder before termination? The house has not built yet and the commission will go to the previous broker when it closes. How I can get my commission from the broker that I have no longer under?

Cyndi on 09/17/2015

Yes the broker should know this but there could be a dispute so I think highly of her/him for getting clarified thru legal.  That is part of why we pay our dues to get legal advice when needed.  I know there have been lots of disputes over this in offices I worked at even with signed statements of understanding.

Doris Snipp on 09/17/2015

The fact that a Broker would even ask that question is a clear indication that requirements to be a Broker are not stringent enough. It also indicates the Broker Responsibility course is lacking.  This information should have been learned as a sales agent. It would be interesting to learn if he has signed statements of understanding with all his agents.

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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 texasrealestate.com. Any legal or other information found here, on texasrealestate.com, or at other sites to which we link, should be verified before it is relied upon.

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