Broker engagement terms determine when a commission is earned, which is the
usual dispute.
Exclusive right to sell or lease. The broker earns a commission on any
transaction during the term regardless of who procures it. Exclusive agency
excludes owner-procured transactions, and open listings pay only the procuring
broker.
When earned. On a fully executed agreement, on closing, or on the landlord
accepting a tenant. Tying the commission to closing rather than to signature
aligns the broker with completion.
Procuring cause. Where more than one broker claims, the analysis is who set
in motion the chain of events leading to the transaction. Registration
procedures for prospects reduce these disputes substantially.
Tail or protection period. A commission payable after termination on a
transaction with a party the broker introduced during the term. Negotiate a
defined list of protected parties delivered on termination, and a reasonable
duration.
Cooperating brokers. How the commission is split, and whether the owner has
any obligation to a broker representing the other side.
Renewals and expansions. Whether the broker is paid on renewals of a lease
it procured, which is frequently the largest number and frequently unaddressed.
Licensing. An unlicensed person cannot recover a commission in most states.
