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Nonpayment of commissions in residential real estate

On Behalf of | May 25, 2022 | Wage & Hour Laws |

Many salespeople depend on commissions to provide them with income. In some industries, such as real estate, it’s common for salespeople, or agents, to receive no salary at all and to depend entirely on sales commissions. Commissions for residential real estate agents are typically based on a percentage of the home’s sales price. With property values as high as they are in Florida today, this can be extremely lucrative.

Denied commissions

While commissions may be a good way to make a living when the market is hot, when the market slows, the salesperson’s livelihood could be affected, particularly if they don’t receive what they are rightfully owed. In many cases, the real estate brokerage firm under which the agent is listed will withhold a part of the agent’s commission after a successful property sale. In most situations, the commission withheld is stipulated and understood among all parties involved. Alternately, in other more rare instances, a commission could be withheld erroneously from a broker.

Additionally, some real estate companies take the position that a commission will only be paid if the salesperson is employed at the time the commission is to be paid. This can be problematic where a salesperson has sold a property, but the salesperson is terminated or quits before the closing has occurred and before the real estate company has been paid its commission. Whether a commission is owed in such circumstances depends upon whether there is an agreement or policy that addresses the issue. For example, if the salesperson’s agreement, or the company’s policy, indicates that the salesperson must be employed at the time the commission is to be paid, under Florida law, the company is not obligated to pay the commission to the departed employee. On the other hand, if there is no agreement or policy, the question becomes whether the commission has been vested and earned by the salesperson, meaning whether the salesperson has done their job such that all that remains to be done is the responsibility of others at the company.

Legal avenues for agents

When a salesperson is wrongfully denied commissions, there are several avenues available in Florida for residential real estate agents. First, the agent can address the issue to the Florida Real Estate Commission. However, unfortunately, FREC cannot legally force the broker to pay the rightfully owed commission. Often times, the agent will need to file a lawsuit and obtain a court order against the broker if they wish to get paid. This can be accomplished with the help of an attorney with knowledge in this area of law.