You are the listing agent, and the seller decides to dispute the amount of your commission or breaches the listing agreement and fails to pay your earned commission. What are your remedies? We often receive requests from brokers to place a lien for commissions on the real property being sold. However, this is not an automatic right, and is not always an available remedy.
Florida Statute §475.42 prohibits a broker or sales associate from placing a lien on real property for the payment of commission or any other amounts owed to broker, unless (1) expressly provided by contract, or (2) the broker obtains a judgment. Therefore, a broker cannot record a lien on real property unless the listing agreement or other contract expressly allows the broker to record a lien, or unless the broker obtains a judgment in a court of law and records the judgment as a lien.
However, there are additional lien rights available in commercial transactions. The Florida Commercial Real Estate Sales Commission Lien Act (the “Act”) provides commercial real estate brokers an automatic lien on the proceeds from the sale of commercial real estate for any commission earned by the broker under a written broker’s agreement. This is a lien on personal property and does not create a lien on the real estate being sold. As such, the broker cannot record a lis pendens against the real estate that was sold in order to force the seller to pay the broker’s commission.
To perfect this lien right, the broker must comply with the specific requirements of the Act, which include notifying the owner of the lien right prior to signing the agreement, sending specific commission notice to the owner and the closing agent of the claim to commission at least one day prior to closing. If the broker timely delivers notice of commission, the broker can also record the notice in the public records. Although the lien is only against the seller’s net proceeds of sale, it does cloud the title and a buyer will find that unless the commission is paid, the lien remains against the property.
Commission and lien rights can be complex and highly dependent on contract language. As such, it is prudent to have an attorney review any proposed listing agreement prior to signing.
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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