What Is a Commission Agreement?
In Florida real estate, brokers and agents do not work for a salary; they work exclusively on commission. However, a broker cannot legally demand a massive payout at closing unless there is a written, signed contract explicitly authorizing it. This is the commission agreement.
In residential real estate, the commission agreement is typically embedded directly into the Exclusive Right of Sale Listing Agreement signed by the seller. It dictates that the seller will pay the listing broker a set percentage of the final sales price (traditionally 5% to 6%), and the listing broker will then split that fee with the buyer's broker.
Commercial Commission Agreements
In commercial real estate, commission structures are vastly more complex and usually require standalone, highly customized commission agreements. These agreements must clearly define exactly when the broker has "earned" their fee.
- Commercial Leases — If a broker finds a tenant who signs a 10-year commercial lease worth $1 million, the broker's commission agreement will dictate how they get paid. They might get 50% of the commission on the day the lease is signed, and the remaining 50% on the day the tenant physically moves in and pays their first month's rent.
- Procuring Cause — The agreement must protect the broker's right to payment if they are the "procuring cause" of the deal. If a broker introduces a buyer to a warehouse owner, and the buyer and owner secretly conspire to cut the broker out and close the deal privately a month later, the commission agreement allows the broker to sue the owner for the stolen fee.
Commercial Real Estate Leasing Commission Lien Act
To protect brokers, Florida enacted Chapter 475, Part III. If a commercial landlord refuses to pay a broker their legally owed commission, the broker can record a massive lien directly against the landlord's commercial property, preventing the landlord from selling or refinancing the building until the broker is paid.
Related Terms
- Listing Agreement — The standard contract containing residential commission terms
- Commercial Lease — Where complex, staggered commission payouts are utilized
- Lien — The legal weapon brokers use to force payment of their commission
Barnes Walker Commercial Broker Representation
Barnes Walker's attorneys assist elite commercial real estate brokers in drafting ironclad commission agreements, and aggressively utilize Florida's statutory commercial lien laws to freeze landlord assets and recover stolen multi-million-dollar broker commissions. Request a legal inquiry for assistance.
Florida Law Reference
Fla. Stat. Ch. 475
Regulates the licensing, conduct, and commission structures of real estate brokers and sales associates in Florida.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC