I have an appointment with a real estate broker today who joined a non-typical local real estate brokerage a couple of years ago but has now left. At the time she joined the brokerage, she signed a four page confidentiality agreement. Can you guess why she is coming in?
In the old days, a contract with a brokerage might be a page or two of simple language penned by the broker-owner. Today, I am seeing more and more brokerage contracts with reasonably complex terms and non-competition and non-solicitation agreements.
I know a lot of brokers. Not one of them has ever asked me to review a brokerage contract before he or she signed it. So, here is my question (with apologies to Clint Eastwood): Are you feeling lucky? Well, are you? (I’ve definitely got a Clint vibe today.)
A better question might be: Do you know what each term of the contract means when you are signing it? Do you know when you will get paid? Do you know if the brokerage has purchased (and must continue to purchase) errors and omissions insurance? Do you know who decides how to split a commission if you and another broker disagree? Do you know if the brokerage will represent you if that picky client files an OREA complaint? Do you know what part of your commission the brokerage will retain on commissions received after you have left the company?
Here are some more difficult questions: Do you know what it means if a company officer can act as your attorney in fact even after you leave the company? Is there a difference between a customer and a client? What does it mean if the obligations in the contract continue after termination?
I’m betting that the answer to the vast majority of the above questions is ‘no’ and, if I am right, you had better be lucky because, if you are not, the contract may temporarily (a couple of years) keep you from serving buyers and sellers that you have marketed to for years.
No matter how smart you are (and I know you are!), you probably don’t have the experience to look at a contract and determine what future risks you are taking. Even if you “have” to sign the contract so you can work, isn’t it better to know what you are getting into so you know what your options are later on?
Lawyers do this for a living. It’s got to be better to pay the lawyer at the beginning of the broker-brokerage relationship than to pay him or her later when the brokerage has kept 90% of your last and biggest commission, right?
Have a question? You can reach Portland real estate lawyer Kate Brooke at 503-972-0400.