Legal FAQs for REALTORS®
— Sharing Fees
Terminating Agent Sponsorship & Fees
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? (updated September 15, 2015)
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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