I'm getting close to finishing my required courses before taking the state exam and I do know which Broker I would like to work with. Upon interviewing this Broker, the topic of a Non-Compete Agreement came up. She say's I have to sign a 5 year Non-Compete! Now, everything else she has to offer is great: the going rate for commission split, no desk fees, my own office, etc. This Non-Compete is really bugging me though. This broker has an office in my hometown which I'm very familiar with so if this doesn't work out with her, I can't go to another broker in the same town for 5 years! I do plan to set up another time to talk with her to ask if it can be negotiated at all and explain my concerns. She is really nice and seems to be very reasonable but I just wondered if other brokers have this stiff of a Non-Compete Agreement. Thoughts?

RUN!!!!!

This is ridiculous. You might not like her. You may very well not like her. She may fire you, for crying out loud!!! You may not like other agents in her office. There may be policies you do not like. There is no way you can learn everything about policies you might like or dislike during an interview--even for an experienced agent who knows what questions to ask. And I have never seen or even heard of similar policies from other agents. Let her learn the hard way by getting NO agents to agree to this ridiculous request.

I would just tell her that the non-compete is a deal breaker, but that you would be excited to join otherwise. Or I would RUN b/c she may always resent the fact that you refused to sign.

Geesh, the nerve . . .

I wouldn't do that. 5 years is a REALLY long time.

I do not think that this is even enforceable - does your state association of realtors have a legal hotline?

at any rate, I would not want to work with someone that paranoid anyway.

GIANT RED FLAGS WAVING

This would not be good for you as it would limit your options going forward. Perhaps a non-compete to the extent of not setting up your own agency with in some geographical radius for certain period (for example with in a mile of her office for up to one year from leaving her agency) but certainly not good if you can't go to another existing agency. In any event it should not be over a year.

That is well beyond unreasonable. Who in their right mind would lock themselves into a five year agreement like that? I say stay away from that broker.

I can understand a limited non-compete in the event you were getting some assistance from the broker, such as paying for your licensing classes, some proven training, etc. But to sign a non-compete agreement just for the privilege of working their doesn't seem to make much sense.

I really appreciate all of the responses so far. I am going to ask her about some of the points that have been brought up here. I figure she was burned in the past and that is why she came up with this. I especially like your point Perky, thanks and I will do some research on that. There is only one other agent that works in her office-this is probably why. I know that is a huge understatement!

If this is how she is starting out your relationship you can count on it only getting worse. Once she has you locked in she will be free to do what ever she wants.

Run Forest run.

We have BIG controversies with young Veterinarians and Dentists (and one Taxidermist) who have these Non-Compete Clauses in their New Hire Agreements; but I've never heard of one being required in Real Estate.

I do believe I have heard of it being a common clause for Appraisers.

I don't like any variations on a non-compete. Why set a precedent for other brokers/agencies? It's like opening the door to discount brokerages & FSBOs . . . a slippery slope.

Besides, there are way too many agencies where you don't have to sign anything (read: all other agencies). No restrictions on my future employment opportunities. Sorry! None.

When I called our legal hotline to see if it was enforceable - I was told that it "most likely" was not. They couldn't tell me over the phone of course, without seeing the contract.

I signed one of these "non compete" contracts but at the time I had no desire whatever to leave.

But things change. Do not sign it. No matter how bad you want to work there. Under no circumstances should you sign it! Not even for six months! Or a year!! Not for ANY period of time.

1. start your own. 2. spend $300 for an hour with a good attorney. most non-competes are illeagal in most states. if your state does have one, there are often execptions when its the only way for you to earn a living. if she has a 5 year non-compete she is not reasonable.

also, if it is illegal. you may not want to bring the issue up with her until you need to.

Sellmydigs: Start your own what?

On a side note: it could be that this broker doesn't WANT any new agents and rather than say "No" she scares 'em off with this. LOL

Just curious; and before this topic becomes inactive, I'd like to know if the Wording is such that the 5 Years commences at the beginning of the Contract, OR if it starts at the point you part ways. When the Meter starts running would be very important. Also, how was it restricted Geographically ? By the location of the Office, or the location of some future Transaction ?

My experience with the Veterinarians is that they are prohibited from starting a new practice anywhere within a 20 mile radius of their Employer for a period of time, usually 2 years. Most of them sign; its to protect the Employer (educator) from losing his customers. I'v sold houses to departing Vets who could only consider places "outside" those tight radii. They seem to be enforceable . . . . we have one in the Courts now.

Locally: Non-compete clauses, referred to as restrictive covenants in an employment contract are enforceable, depending upon the actual wording and legal interpretation.

NON-COMPETE CLAUSES, are usually inserted in employment contracts to prevent employees who have usually established a personal relationship with a number of the firms clients and upon leaving their employer take all the clients with them, or have clients (without solicitation) voluntarily following the employee to a new employer.

Reasonable restrictive covenant in such matters are usually limited to “clients of the employer “ and do not prohibit the employee, following his termination from soliciting “non-clients” of his former employer.

In a recent decision involving "insurance agents" the legal interpretation giving insight, as to what is reasonable and enforceable can be found in the decision of the Ontario Court of Appeal in H.L. Staebler Company Limited v. Allan, 2007 CanLII 37692.

the details of which can be found by via the Link or cutting and pasting of the following URL

http://www.canlii.org/eliisa/highlight.d...008onca576.html

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information

I'm gonna be very general here b/c I don't want to give you any advice that you rely upon b/c I have not read the contract and/or your state statutes and cases regarding non-competes.

I used to be a practicing attorney in employment law and other areas. We dealt with non-competes all over the country. There is a different statute in every state (there may be some states that do not have them at all; I haven't checked every state; but most states have them). Then they have (usually hundreds) of cases interpreting those statutes. Whether any particular non-compete is enforceable, and its terms, would vary greatly depending on the particular contract and the statute itself. The statute may prohibit certain limitations--typically geographic limits that are too wide and time limits that are too long. 5 years would be crazy long from my recollection of the time periods (typically 1 to 2 years would be more common). So, I would NOT assume that the contract is unenforceable, until and unless you talk to a GOOD attorney who has handled these types of cases before (not just ANY attorney).

That being said, I don't care if it's enforceable or unenforceable, and neither should you. RUN!!!! This is a bad idea. People change. You may change. And you can't predict her behavior. Heck, it might be a ploy to get rid of competition--just hire everyone in town, have them sign a non-compete, and then fire them. (Some non-competes have specific terms, like only if you quit the job, but still . . . YOU MAY CHANGE YOUR MIND and still want to sell real estate, just not with her.) What if you are a top producer and she starts killing you on the splits or other compensation issues? This happens OFTEN in real estate. Do not lock yourself in.

FYI--normally the clock starts ticking when you leave the job.

Good luck.

Tina

You should not rely upon this advice. You should consult an attorney who can review the actual statute and rules before you make any decision based on the legal issues discussed in this post. I do not know the specifics of your case and cannot give accurate advice without knowing the specifics.

I think if you talk to a local attorney, you'll find that most of these "non-compete" clauses aren't worth the paper they're written on. I personally signed one many years ago, when I worked at a local mortgage company. I then resigned my position to accept a position with WAMU. The local mortgage company didn't bother trying to hold me to the "non-compete" clause that I signed, willingly. You will find that courts in most jurisdictions take a very dim view of employers attempting to restrict people from making a living in their chosen field!


John from Boston

I am so glad I asked this question here because coming into this brand new, I just didn't know if this was standard practice. I'm going to call this Broker and set up a meeting with her asap to discuss the Non-Compete with her further. It truly is a deal breaker. I so appreciate all of the input from everyone here, thank you all again!

Well, I just wanted to let everyone know that I spoke with my potential Broker today and explained my concerns about the Non-Compete agreement. She pulled out her copy and looked it over and realized that it was for Licensed Real Estate Assistants not Licensed Real Estate Agents! She said if for whatver reason, things don't work out, I am free to go wherever I want to. I am so releived! Geez, I stressed over nothing!

She apologized to me and said she wasn't sure why she brought that up except maybe because she had last interviewed an applicant for a licensed R.E. Assistant.

Somehow, I am not comforted by the fact that the broker didn't know the difference between a real estate agent agreement and assistant agreement.

This would make me even more concerned about her as a broker!!!

And five years for any non compete is insane.