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Legally speaking: So you’re transferring your license… (Part 2)

By Peg Ritenour, OAR Vice President of Legal Services/Administration

In last week’s OAR Daily Buzz post I addressed some of the common questions about the status of an agent’s listings when he/she transfers to another brokerage. Below are some questions concerning payment of commissions in this situation:

Q: I am planning to transfer my license to another brokerage. I have a contract pending that will close after the transfer takes place. Does my broker still have to pay me my commission on this transaction when it closes?

A: Under Ohio license law, a  broker is generally obligated to still pay an agent his or her earned share of the commission in this situation. Your “earned share” is the amount that was agreed upon between you and your broker. This may be contained in an independent contractor agreement you have with your broker or in your broker’s company policy. These should be closely reviewed for any provision that limits your right to a commission upon termination. Absent such a provision, you are entitled to the commission split  you and your broker agreed upon.

Q: Does my former broker have to make out my commission check payable to my new broker or can he pay me directly?

A: No. This check can be paid directly to you.

Q: A former agent had two deals in contract that closed after she transferred to another brokerage. I had to do quite a bit of work to get these deals to close. She also owes me money for other expenses not related to these transactions. Can I make deductions for the work I had to do to get the transactions to close and the other amounts she owes me?

A: If you have an independent contractor agreement with your agent that permits you to make deductions for monies the agent owes you and to make deductions from commissions for work performed by others in the brokerage to get the transaction to closing, you can follow those contractual provisions and make these deductions. On the other hand, if the independent contractor agreement does not provide for such deductions from the agent’s earned commission, then they cannot be made.

If you don’t have an independent contractor agreement with this agent, you may still be able to make these deductions if you can establish that you had a brokerage office policy that sets forth your right to make such deductions upon an agent’s termination and that the agent was aware of this policy. Absent such a policy, the Division usually will not permit deductions for work others had to perform or for unrelated monies the agent owes the broker.

Tags: legal, Legally Speaking