For the most part, associate rights and obligations spring from the terms of the independent contractor agreement they have with their brokerage firm.
ORLANDO, Fla. – Here’s a difficult conversation we occasionally have with associates on the Florida Realtors Legal Hotline. The associate will call, typically furious with their broker, after a listing or transaction gets assigned to another licensee in the brokerage firm.
“What gives them the right to take my listing away?” Or “That’s my buyer! The company only has the deal due to my networking … isn’t this just theft?”
On the one hand, I understand the frustration. The first time I used a Realtor’s services, we were selling our first home in Beaufort, South Carolina, preparing to move home to Florida. Our real estate agent, Mary McClaskey, was a shining example of what it means to be a Realtor. She was attentive, thoughtful, and diplomatic. This was during the early days of the Great Recession, around 2007. We were only getting nibbles, and she came by the house to explain that, as much as we wanted to recoup a certain amount, the market had recently turned. She showed comps and graphs to demonstrate that if we dropped our list price to a certain point, she was confident we could still get a contract before we moved away.
Her advice was spot on, and we managed to close quickly and still make some money in the early days of a multi-year, deep market slump. Did I know who her broker was? No clue. Did I know any of her co-workers? Nope. Did I want to work with anyone else at her company? Absolutely not.
On the other hand, when I put on my lawyer hat, I knew that my listing agreement was not with her. It was with her brokerage firm. I remember not loving all the terms in that agreement, but I also remember trusting her quite a bit (and that trust was not misplaced). Things worked out. But from my perspective as a seller, I knew I wasn’t entitled to her representation alone, even though she was the only person I talked with in her company from start to finish.
What about an associate’s perspective? It’s typically all about the independent contractor agreement (ICA). Let’s start by looking at the Florida Realtors’ form ICA.
Section 2(d) makes it clear who owns listings – it’s the brokerage firm. This section goes beyond listings, though, since the brokerage firm also owns pending transactions.
Additionally, the brokerage firm owns “programs, forms, data, keys, manuals, signs, and other paraphernalia relative to the business of Broker,” which is why some data management platforms, like Form Simplicity, leave files in the broker’s control after an associate leaves the firm unless the broker authorizes release to the associate.
What if the brokerage firm decides to have a different associate take over a transaction?
Section 3(c)(2) provides that if two or more associates provide service on a given transaction, then the “Broker will determine, in Broker’s sole and absolute discretion, the amount of the fee due Associate.”
Please keep in mind that this is just one example of how an independent contractor agreement can be structured. Many brokerage firms choose to use an ICA that their own attorney prepared, which could be very different from our form. Others may choose to have a less formal agreement. The important part to understand is that an ICA is the central document that spells out what rights and obligations an associate has. Sure, an office manual or other document could change the analysis, but the ICA is typically at the center of these questions.
Also keep in mind that an ICA is a negotiable document. There are a full 20 blank lines in Section 8, Additional Terms of the Florida Realtors form ICA, and the parties are always welcome to add their own riders. They can also opt out of using any form and start from scratch, if they prefer. Both sides are, of course, welcome to consult a lawyer for help negotiating or understanding the ICA they choose to sign.
Whichever way they go, both sides should have a clear understanding about their ICA, so that there are no nasty surprises down the road.
Joel Maxson is Associate General Counsel for Florida Realtors
Note: Information deemed accurate on date of publication
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