A recent Legal Hotline caller was concerned with what would happen to her pending listings and executed Agreements of Sale that had not yet settled when she transferred her license from Broker #1 to Broker #2. Can she take the listings with her to Broker #2? Is she entitled to a commission for those deals that settle after she leaves?
Hopefully the Caller signed an Independent Contractor Agreement with Broker #1 that addressed her rights to “take” her listing with her and addressed her rights to collect commissions on deals that had been signed but not settled; this will relieve both the broker and the agent from a lot of pressure. Because it is the broker, and not the salesperson who is contracted with the consumer, absent a separate agreement, the salesperson does not have a right to take her listings with her when she leaves.
If there is no Independent Contractor Agreement, or if it is silent on what happens to consumers and commissions when an agent leaves, the salesperson will be left with few options. She can negotiate with Broker #1 as to which listings (if any) she can take with her. Her ‘entitlement’ to a commission on deals signed but not closed is less clear; different transactions will be at different stages requiring different levels of work. How much work is needed to get the deal to settlement may affect what a broker is willing to do. She can negotiate with Broker #1 the amount of commission she will receive when the pending deals close. If the agent is leaving on good terms, then she and the Broker may be able to work something out that benefits each. Remember though, as an agent, your bargaining power is at its pinnacle when you first come to work for a broker, and not when you are leaving.
One more thing to consider; if the agent’s discussions with her broker start a downward spiral, the agent may be able to look to the broker’s custom and usage to salvage something. By looking to custom and usage, the agent will be arguing that the broker has to treat her now, the same way the broker treated all the other agents who left before her. Be warned; custom and usage is not easy to prove (and a more detailed discussion is beyond the scope of this blog!).
Do not forget that the consumer, and what the consumer wants, is an essential factor to consider. The consumer’s contract is with the broker; even if the broker lets the agent ‘take’ her listings, if the consumer wants to stay with the broker the consumer gets to stay with the broker. This is not a two way street, though. If the consumer wants to go with the agent but the broker says ‘no’, the consumer needs to remember that they signed a contract.