[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]
QUESTION: We have an agent that showed a buyer a property. Afterwards, we learned the buyer had signed a buyer’s rep agreement with another agent; however, the buyer does not want to use that other agent. Is there any way to get around paying the other agent?
ANSWER: This buyer may be in a position to owe two different commissions! At this point, all you can do is recommend that the buyer consult with his own legal counsel concerning the first buyer’s rep agreement. You should NOT do anything further than that concerning how to terminate the agreement! If you do, you could be charged with interference with a contract.
A buyer’s rep agreement is a written contract which establishes an agency relationship between a buyer and a real estate company. In order to terminate this contract, it requires a termination and release in writing and signed by all parties to the buying agreement. It should terminate the contract and release both sides from the obligations under the original buyer’s rep agreement. Until this is completed, the buyer’s representation agreement will continue in place until its natural termination.
If you have a buyer who wishes to terminate their buyer’s representation agreement with you, your principal broker must decide whether you wish to hold them to that contract or not. This is completely up to the broker as to whether they want to release them from the representation agreement. TAR provides a form for you to use if you wish to agree to terminate the buyer’s representation agreement – form F82. [If it is a listing agreement that is being terminated, the form does provide a carry over clause (if they sell their home within X days without the help of another agent who was introduced to it by the original listing agent) and a place to negotiate a cancellation fee. It also provides for a complete release with no fees having to be paid.]
In order to avoid what could become an ugly situation, the two principal brokers may agree to some sort of commission split. This is not required of either company, but it is a possibility.
[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]