Listing Agreement Indemnity
While a broker will generally accept that the transaction is a condition for the payment of his commission, the broker may wish for additional protection by providing in the listing agreement that the broker is entitled to a commission if, instead of selling his property, the seller concludes an „alternative transaction“ that goes to the conclusion. The language of alternative transactions may be very broad, but it is at least intended to protect a broker when the seller intervenes: the sale of the ownership of the company to which the property belongs; A basic rental or other rental of the property A real estate sale option or a joint venture for the development of the property. Alternative trading rules can be complicated and difficult to negotiate, not least because they must cover many possible contingencies without dealing with them in detail. For example, while a seller cannot object to the payment of a commission if the seller enters into a long-term lease of the property instead of a sale, the seller wants to know how the broker`s commission is calculated on a lease agreement and when it is due (for example. B in case of rental or occupancy or multiple payments). If the listing agreement involves other transactions, the seller and broker may need to spend some time reconsidering and expanding the most likely alternatives and applicable commission agreements. Moreover, why should compensation be unilateral; What if the agent had made you compensate in the same way as you would like? It`s just for me. In order to continue to protect the seller, the list agreement should provide that the broker compensates the seller and limits the damage suffered by the seller in accordance with the agreement. Compensation from the seller`s broker should not object to adding language to the list agreement for most brokers who require that the sale concluded before the broker has earned his commission. In addition, it is in the seller`s interest to extend this concept, so that, with the exception of some carve outs, no other royalties, compensation or refunds should be paid to the broker, unless the sale closes.
For example, the seller would not want to pay the real estate agent any or part of a lost deposit. The seller also does not wish to reimburse the broker for expenses or expenses, unless the broker and seller have expressly negotiated an allowance or „furniture provision“ to reimburse the broker for certain expenses such as the creation of a brochure and advertising. If the seller accepts such a refund rule, the seller wishes to verify: limiting the type of fees that can be reimbursed, payment of eligible expenses only to parties that are not related to the broker or employed by the broker, and limiting the seller`s maximum repayment obligation.