RE/MAX AROUND ATLANTA
  • Home
  • RMAA HUB
  • Events
  • Local Service Providers
    • Attorney Partners
    • Lender Partners
    • Home Cleaning Services
    • Home Inspection Companies
    • Home Warranty Companies
    • Insurance Providers
    • Moving Company
    • Photography
    • Property Management
    • Repair Services
    • Residential Renovations
    • Security Systems
  • OUR TEAM
  • Online Payments
  • BROKER CORNER
  • Locations
  • MAXtech
  • Request Field Services

BROKER CORNER

The Buyer Broker’s Rights to Payment

4/3/2023

0 Comments

 
Picture

Situation:
Broker A has a valid Buyer Brokerage Agreement with an individual Buyer.
Broker A and the Buyer view a property together with Broker B,
representing the Seller. The Buyer submits an offer on the property, but
withdraws it before the offer is accepted.
Later, while the Buyer Brokerage Agreement is still in effect, Buyer crates
an LLC with a partner and submits a 2nd offer to purchase the same
property. The Buyer’s Broker is not included in the new transaction. The
transaction closes with the new LLC, of which the Buyer is a Member. The
Buyer is at the closing and signs the security deed.
​
Questions:
  •  Can a Buyer avoid an obligation to pay the Buyer’s Broker by changing their legal entity?
  •  Is the Buyer’s Broker due a commission from the buyer?
  •  Is the Seller’s Broker in violation of either License Law or the REALTORS® Code of Ethics?

Buyer as a Legal Entity and Commission Owed to Buyer’s Broker
The Buyer Brokerage Agreement at paragraph 7(f) includes the Buyer as
follows:
"Any legal entity in which buyer or any member of Buyer's immediate family
owns or controls, directly or indirectly, more than ten percent (10%) of the
shares or interest."   Where the buyer changes its legal entity to another
either to avoid its obligation or innocently, the Buyer is still obligated on a
Buyer Brokerage Agreement that is still in effect.
No, the Buyer cannot avoid its obligation to the Buyer’s Broker by changing
its legal entity so long as the Buyer owns more than 10%. And yes, the
Buyer continues to owe a commission to the Buyer’s Agent. It may take
legal action to recover the commission, but it is owed.

The Listing Agent’s Obligations
REALTORS® have an affirmative obligation to ask prospects whether they
are a party to any exclusive representation agreement and may not
knowingly provide substantive services concerning a prospective
transaction to prospects who are parties to exclusive representation
agreements. In this case, the Seller’s agent was fully aware of the original
buyer, having shown the property to the buyer previously, along with the
Buyer’s agent. Even if the Seller’s agent thought the Buyer Brokerage has
expired or was terminated, the listing agent should have investigated. Had
he called the Buyer’s agent he would have learned that the Buyer
Brokerage was still in effect. He violated both Georgia License Law and
the REALTORS® Code of Ethics.
(GA Code § 43-40-25 (14) and § 43-40-25 (26), REALTORS® Code of
Ethics Standard of Practice 16-9)
0 Comments



Leave a Reply.

    RMAA

    Real Estate News, Brokers Blog & More

    Categories

    All
    Broker's Corner
    Mortgage Minute

    Archives

    May 2025
    April 2025
    March 2025
    February 2025
    January 2025
    December 2024
    November 2024
    October 2024
    September 2024
    August 2024
    July 2024
    June 2024
    May 2024
    April 2024
    March 2024
    February 2024
    January 2024
    December 2023
    November 2023
    October 2023
    September 2023
    August 2023
    July 2023
    June 2023
    May 2023
    April 2023
    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    July 2020
    June 2020
    May 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019

    RSS Feed

RE/MAX AROUND ATLANTA
Phone # 404-252-7500
RE/MAX Around Atlanta licensed in the State of Georgia

© COPYRIGHT 2025. ALL RIGHTS RESERVED.
  • Home
  • RMAA HUB
  • Events
  • Local Service Providers
    • Attorney Partners
    • Lender Partners
    • Home Cleaning Services
    • Home Inspection Companies
    • Home Warranty Companies
    • Insurance Providers
    • Moving Company
    • Photography
    • Property Management
    • Repair Services
    • Residential Renovations
    • Security Systems
  • OUR TEAM
  • Online Payments
  • BROKER CORNER
  • Locations
  • MAXtech
  • Request Field Services