I have been working with a 1st time buyer who is a friend of a friend. Upon our first meeting I had her sign an agency disclosure, but no a buyers contract. We looked at some homes and she still wanted to look at some more in a few days.

In the meantime, I get a great opportunity to work at another company and transfer my license. Well that night my client calls and wants to write an offer on one of the house I showed her a few days ago while I was with my old company (again keep in mind there was no contract in place). I meet her and have her sign a new Agency Disclosure form, a buyers contract, and write the PA up- all in my new companies name.

Well to make a long story longer, the day of close I'm informed that my old company is putting a freeze on the commission because they state clients don't transfer with the agent. I don't see how they can call her a client when there was never a buyers contract in place.

My new broker is out of town until late next week and he is the only person that can call the legal hotline. I need help.

People too often use the terms "Client" and "Customer" interchangeably. Even in this post, you said that your "Client" called that night to write an Offer. How was he/she referred to when you were at the old brokerage ? Did you use the term "Client" when you were showing their Listings ? I presume that the property that the now "Client" is interested in is a property listed by the old brokerage . . . . hence the rub ?

That is the big question- was she a client or a customer. Without a contract she would be a customer, so I apologize for the confusion. Here is what happened in order.

1. I was introduced to a lady that wanted to look at houses and she was just in the looking stage she told me. I was at the time with company A. She asked me about a few properties that she found online and none of these where listings of company A.

2. I met her and she signed an Agency Disclosure form, but not a Buyers Contract. We looked at 4-5 homes and she said she liked a few of them, but wanted to look at a few more.

3. I transferred to company B and that night she calls and has decided to write an offer on one of the houses we had been through (this is not a listing of my old company A).

4. We meet and I have her sign a Buyers Contract, a new Agency Disclosure, and we write the PA up.

5. Two days before the closing my old company finds out about the closing and puts a hold on the commission check. They believe since I had shown the property that this lady eventually wrote an offer on while I was with there company, they deserve a commission. My argument is she found the property, was never a client of their's because a contract wasn't in place, and since my license was already transferred I had to write in the new companies name. They don't have a written policy on what happens to a salesperson's clients and customers when they join a new company either.

Any advice would be greatly appreciated.

Thanks

If the introduction was because of your old company (ie. your broker, walk-in etc.), you owe your old company a commission. Maybe you can negotiate a referral fee?

She was a friend of a friend-not introduced by my old company.

I had the same thing happen when I changed brokerages.

I had an offer in on a property that was being negotiated, BUT the bank was extremly slow in responces. The Open Til date expired, I changed brokers, and resubmitted.

My client eventually won the bid and the Broker claimed procurring cause.

My broker was willing to go to bat and fight for me. The former broker was going to fight for it as well. Maybe for spite or perhaps he felt he was entitled? I was told to make a decision.

I decided the fight would take up to much time and informed my broker to negotiate a referal fee and end the fight. The time involved would take away to much time. I likely would have won the battle in the arbitration, but lost alot time and energy at the detriment to other clients.

Did I cave? Yes, but, In business I way the costs of deals on dollars and cents and sense. The costs of fighting and winning to "stand" on priciple generally costs you more.

One of my clients lost their Deposit when they killed a contract over a 50 dollar per diem. They were late and felt it was not their fauld. The listing agent said he would pay, I said I would pay, they would not sign the paperwork. The seller and buyer both took a stance, and the deal died. All we could do was scratch our heads? A fight on priciple cost everyone involved alot of money.

Negotiate it.

Around here, we have a saying that "you can't own a Customer". If she is now your Client at Company B, and the Listing is with, say, Company C, why is Company A still in the mix ? If they collect anything, it is probably a voluntary gesture on your part, not an obligation. In this business, we often do a lot of things voluntarilly that are not legally imposed on us; it just happens that it makes for a better and more cooperative business climate.

My old company is arguing that she bought a property that I showed her while I worked for them- again even though there never was a buyers contract in place. Here is the exact wording in the e-mail I received,

"In a procurring cause case you were representing our company upon first substantive contact, first inspection of this property (3/2/08) and other properties, and the likely decision of the buyer to make an offer on the property. This client at the point of first sustantive contact became the customer of us, not your new company. Customers do not transfer with agents."

Any ideas? I just mightg let this go to arbitration and see what happens. There is no way I'm paying my new broker and my old broker and only making 20% on this deal.

I think you're in a good position EXCEPT that I would worry a little bit about the "Original" Agency Disclosure that the Buyer signed when you were back at Company A. Our forms have a simple Check Box for that which sometimes gets checked indicating that the Agent is representing the Buyer versus other box(es) for the Listing Agency or a Broker Agency. Even some new Agents (and old) will often get confused into thinking that they have a Contract to Represent a Buyer just because of that little check mark; not a Buyer-Broker Agreement or Contract. Do you have a copy of the Original Agency Disclosure ? or does that reside ONLY at the Office of Company A ?

In MN our agency disclosure states the following:

This is an agency disclosure form only. If you desire representation, you must enter into a written contract according to state law ( a listing contract or a buyer representation contract). Until such time you will be treated as a customer of the broker or salesperson and not represented by the brokerage. The broker or salesperson would then be acting as a Sellers agent, or as a nonagent.

Please let us know how this finally pans out; I gather it's going to be a few weeks. I am not familiar with the procedure for your old Brokerage "A" to "put a Freeze on your Commission" (especially when they are not participants in the Transaction; which is usually quite confidential until the proceedings are concluded. How does that work ? Who do they contact to implement such a "Freeze" ? How do they know anything about this Transaction ? Sounds like a pretty powerful tool to screw up a lot of people using what might be flimsy information. I'm in the dark on what's that all about !

Here is an attorneys input on procuring cause:

http://www.frascona.com/resource/jag594pc.htm

What is the right, ethical thing to do...?

Still waiting on how this is going to pan out. At this point in time I'm going to wait until my broker gets back in town. This was a tough transaction that required a lot of hand holding on my part (the first lender went out of business two weeks before the closing, the closing went four hours with the new LO not showing up and the numbers off, etc).

The bottom line is the commission is almost the same at both brokers and it is only $3275. I don't know how else I could of done this deal. I wasn't planning on the buyer to write an offer and my license had already transferred so I had to write the offer under my new company. If I have to split my commission with both companies then I make squat.

What about the other two clients I have now that I have showm houses to with my old company? If they want to write an offer on any of the homes I have shown them prior to switching companies,am I going to be in the same boat?

That's why I think it's important not to give in to their demands.

Well the 1st one was arguably just a "Customer". Now you're referring to these additional two as "Clients"; so your former Brokerage has a Contract to represent them; Right ? You wrote it ?

I'm still very interested in knowing how they FREEZE COMMISSIONS in Minnesota.

I'm sorry the other ones are customers too- no contracts. In MN all another broker has to do is contact the listing agents company and say there is a dispute on the commission and the listing company holds the commission until arbitration is over.
It's a real pain.

I offered the other broker $700 of the $3275 and he said no- so it appears we will be going to arbitration.

Severing ties with a Brokerage is like a Divorce. If you had any success at all, then you created Contractual Listing Agreements and Buyer Agency Agreements, all on behalf of the Brokerage . These are like the Children that were spawned during the Marriage and their Custody stays with the Brokerage. There is usually a goodly amount of emotion or hard feelings too.

If you had no success and just sat there at a desk and created no tangible product, the split can be nice and clean as you leave to go elsewhere. No Success = No Baggage.

In your case, you'll have to sort through each one of those entangling relationships to determine what will be equitable. It will be far less confusing if you stop using the word "Client" when it doesn't apply. Your now estranged former Brokerage may have been led to believe you're trying to take some of the Children away with you even when you are not because the terms "Customer" and "Client" are being used so interchangeably here (on this Forum); that I can only guess it is done just as liberally in your dealings with the now estranged former Brokerage. Be careful in your choice of words; and Good Luck in Arbitration !

I don't have any contracts in place with any of the customers I would like to continue to work with- just agency disclosures. To become a client they have to sign a contract. Most of these people are friends or referals, so I don't see why I should have to pay my former brokerage any commission on these future transactions and I hope I don't have to pay on this transaction either!!

Well that's good and you have nothing to fear from the Arbitration process (except a DELAY in being paid) if your estranged Brokerage has nothing to hang their hat on.

If you're still conducting business in the same Territory, then it's important not to burn bridges and to let this matter get resolved by others who are not directly involved. You will want to be doing a co-operative business with Agents at the old Brokerage for years to come.

Hopefully, this matter will be looked back on as just a passing misunderstanding. Meanwhile, don't set a precedent by offering more money if there never was a Client relationship with these "Customers". Let Arbitration take its course.

the old broker is trying to intimidate you. what he wrote is not particularly convincing, and is simply his opinion. what makes him think, at that time, that it was "likely" the buyer would make an offer? contrary to his opinion, customers DO transfer with agents...if they want to transfer with the agent. it is the customer's choice. brokers do not own customers, potential buyers, etc., unless they have a buyer's broker agreement. I would think that when the buyer signed the buyer's broker agreement with your new broker, that event alone is enough to show the intent of the buyer to abandon the former broker completely. the old broker likely is on weak ground.

no legal advice

I don't understand how a broker who was not party to the transaction can put a freeze on a commission. The listing broker owes you the commission per the MLS. Your old broker has to go to arbitration to get it from you.

There are rules on how these things are handled and it sounds like they are not being followed.

PS your old broker should get nothing. By their reasoning, everybody you ever talked to while you were there belongs to them.

sounds like it's a Realtor Code of Ethics requirement that applies only to Realtors. here's a good reason NOT to be a Realtor.

There is nothing in the code of ethics that would let a broker from another company, who is not a party to the transaction, put a freeze on my commission. In fact, the listing broker who is not paying the commission to the selling broker is breaking the code and the MLS rules.

The old broker must be pretty stupid in my opinion.......

Procuring cause is not just a beginning chain of events and many arbitration rulings have proven it.

People always check your IC agreements. If this old broker didn't have this situation spelled out in there IC agreement they don't have a leg to stand on.You know what they say about people that assume things........

State real estate commissions hold that if your now OR former agents weren't given a complete IC agreement and trained properly while they were at your brokerage then it is the fault of the broker and they will side with the agent.

A head broker can't just say that's just the way it is you have to disclose everything in writing and have the contracts,forms,and training manuals in place.

I don't see how they can freeze your commission. This simply is not allowed here as there are not part of the transaction closing.

Tell them to go pound sand.

Let us know what happens.

Briefly you don't own any commission to your old broker if you did not have a buyer’s representation agreement with the client while you were with them.

I don't think it has anything to do with being a Realtor. I think there are probably state laws stating that the commission must be frozen if there are any commission disputes from any party.

I would tell your former broker to pound sand also. I don't think they are due any commission from this transaction. There was no contract written with this old brokerage. There should be no commissions due to them.

And also pretty desperate. When times get tough, the desperate start interpreting the Rules in whatever way might put some money in their pockets.

This matter should have been resolved 10 weeks ago or so. Seeing this new response reminds me that we haven't heard "the rest of the Story" yet !

I just looked and we haven't heard from the OP since 5/2/08. Maybe we'll never know !