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REAL ETHICS by Steve Stazel | August 2008 | Index of all Real Ethics columns
Short sales may affect co-op commissions
The MLS said I would receive “X” co-op compensation. But I only received “X” minus $4,000. Should I go to arbitration?
This situation arises more often now that we have short sales. The Ethics and Arbitration Manual discusses this situation in Appendix 1 to Part Ten. It states that: “While offers of compensation made by listing brokers to cooperating brokers through MLS are unconditional, a listing broker’s obligation to compensate a cooperating broker who was the procuring cause of sale may be excused if it is determined through arbitration that, through no fault of the listing broker and in the exercise of good faith and reasonable care, it was impossible or financially unfeasible for the listing broker to collect a commission pursuant to the listing agreement.”
It goes on: “In such instances, entitlement to cooperative compensation offered through MLS would be a question to be determined by an arbitration Hearing Panel based on all relevant facts and circumstances including, but not limited to, why it was impossible or financially unfeasible for the listing broker to collect some or all of the commission established in the listing agreement: at what point in the transaction did the listing broker know (or should have known) that some or all of the commission established in the listing agreement might not be paid and how promptly had the listing broker communicated to cooperating brokers that the commission established in the listing agreement might not be paid.”
If you ever have a “short sale” (or potential “short sale”) listing, I think a notice that it is (or could be) a short sale and compensation may have to be adjusted, should be put in the MLS. By doing this, I think you avoid potential commission disputes.
Each month, the Aurora Outlook features RealEthics, a column by Steve Stazel devoted to explaining Code of Ethics issues for members. The comments stated in this article are those of the author and do not necessarily represent the views of the National Association of REALTORS®, the Colorado Association of REALTORS® or the Aurora Association of REALTORS®. Ultimately, a hearing panel of the Professional Standards Committee determines whether a violation of the Code of Ethics has occurred on a case-by-case basis. These comments should not serve as the foundation of any ethics complaint, arbitration request or response.
If you have an ethical concern or an issue you would like
to see addressed, please call Stazel at (303) 773-3333 or e-mail him at
stazels@msn.com. The comments of this article reflect the understanding and
opinions of the author and do not represent an official expression of policy by the National Association
of REALTORSŪ.
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