What Real Estate Professionals Need to Know about Commission Dispute Arbitration
Commission disputes are common among real estate professionals. Luckily, they typically can be handled swiftly through arbitration by lawyers who know the intricacies of real estate litigation.
What is a Commission Dispute?
A commission dispute is a disagreement about whether a real estate brokerage should receive commission, how much commission is owed, or how that commission should be divided. These disputes commonly occur between brokers but can also occur between a broker and a client. Oftentimes, two brokers or agents claim the same commission, or a broker and a client disagree about whether a commission is due. It is necessary for these disputes to be resolved as quickly and efficiently as possible, typically through arbitration.
Common triggers of commission disputes:
Commission disputes usually center on procuring cause; that is, which broker’s actions directly led to the sale. However, other common causes include:
- Disagreements over the terms of listing or buyer-agency contracts
- Expired listing with protection clauses
- MLS offers of compensation
- Co-brokerage and referral arrangements
What is Arbitration?
Arbitration is a private and binding alternative to court, where a neutral decision-maker hears evidence and determines entitlement to a commission.
Arbitration occurs because:
- A contract requires it, or
- It is required under Article 17 of the Code of Ethics.
How arbitration works
The process starts when a party files a request for arbitration. Each side presents documents and testimony. Then the arbitrator evaluates the information, facts, and contracts. The arbitrator issues a binding decision determining who is entitled to the commission. The process is less formal than court, faster, and typically less expensive.
The arbitrator is a neutral party and can be a retired judge, an experienced attorney, or a panel of realtor members. They decide who is entitled to the commission, how the commission is allocated, and procuring cause.
How are attorneys involved and how can they help?
In an arbitration, an attorney can:
- Determine proper strategy and evidence
- Present opening and closing arguments
- Examine and cross-examine witnesses
- Object to evidence and testimony
- Submit legal briefs and motions
An attorney will fight for your case and ensure you receive the compensation you deserve. They can improve the organization of evidence, legal framing of contract issues, and procedural compliance.
At Davis & Gelshenen, we have been retained by some of the country’s largest and most respected real estate companies and professional liability insurance carriers. With more than 20 years of experience defending real estate professionals, we know the intricacies of the law and are prepared to represent Wisconsin’s real estate professionals in commission disputes. Call us today at 866-427-2121 for a free, no-obligation initial consultation and learn how we can help you abitrate your commission dispute, avoid future risk, and defend impending litigation.