What should I do if the seller won’t allow my commission to be paid at closing?

QUESTION: I’ve got a listing that is supposed to close in a couple of days. To say it has been a difficult transaction would be an understatement. Now, at the last minute, the seller is saying that he’s willing to pay the full amount of the buyer agent’s fee out of the proceeds of sale, but he’s only willing to pay my firm one-half of the listing side of the commission. I called the closing attorney and although she was sympathetic, she said that under such circumstances, she was not in a position to pay our firm what it is owed under the listing agreement or even to hold the disputed amount in her trust account. Is the attorney correct? If so, what should I do?

ANSWER: The closing attorney is under no obligation to pay the commission to which you believe you are entitled out of the closing proceeds or to hold all or any part of the commission in her firm’s trust account until the matter is resolved. North Carolina closing attorneys have historically collected and paid brokerage fees out of closing proceeds as an accommodation to the parties and their brokers, but they are not required to do so, much less when there’s a dispute between a party and a broker about the amount of a brokerage fee.

We’re sympathetic too, but there’s nothing you can or should do to stop the transaction from closing. Although North Carolina law permits real estate brokers involved in commercial transactions to file liens for their brokerage fees in advance of closing under certain circumstances, that law does not apply to residential transactions. You should try hard to resolve your dispute with the seller prior to closing, but if the seller and your firm are unable to reach an agreement regarding the amount of commission to be paid, we suggest that you advise the closing attorney not to collect and pay any amount for the listing side of the commission that is less than the full amount your firm is owed. Why? Because according to law, if a party offers to pay another party in satisfaction of a disputed claim something other than what the other party believes it is entitled to, the other party’s acceptance of the offer may constitute what is known as an “accord and satisfaction.” Applying that law to this situation, your acceptance of a lesser amount paid out of the closing proceeds may bar your firm from pursing a claim for the balance of the commission.

Assuming you used the Exclusive Right to Sell Listing Agreement (Form 101) to list the property, you should advise the seller that if he forces your firm to file suit for your commission, you will seek to recover attorney’s fees pursuant to the Termination/Breach/Mediation/Attorneys’ Fees provision.

Release Date: 06/13/2019; revised 12/29/2023

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Filed Under: Fees/Commissions,