Can I Get Paid?

By Leslie Schwartz, Information Officer

While NCREC is not able to settle compensation disputes per 21 NCAC 58A .0109, there are several common compensation questions that brokers and BICs ask our Information Officers via phone call and email. Below are some common questions and responses.

Agents who are affiliated with firms, or were affiliated with a firm when conducting brokerage, should only be paid by the BIC of that firm for work completed under that BIC, or their current BIC. License rule 58A .0120(b) states, “An affiliated broker shall not be paid a commission or referral fee directly by anyone other than their current BIC or the person who served as their BIC at the time of the transaction.”

I was working under an agency agreement and got a property under contract for my clients. Two weeks before closing, my license went inactive. My BIC informed me that my license was inactive, and I stopped all brokerage activity. Can I get paid for the work I did before my license went inactive?

You may be paid for work performed while your license was active in accordance with your firm’s policies and any compensation agreement you have with the firm. This could be your full commission split, or a referral agreement with the other agent who finished your transaction.  In the event of a dispute between you and your firm, NCREC does not have the authority to compel the firm to pay you. A conversation with the BIC would be appropriate. If a resolution cannot be reached between the broker and the BIC, then it might be appropriate to seek legal counsel. NCREC’s publication License Law and Rules Comments states that, “…payment could properly be made for commissions earned while the license was on active status, even if the license is inactive or expired at the time of payment. The determining factor is whether the license was on active status at the time all services were rendered which generated the commission” (pg. 8). If your firm determines that your fee was earned by your actions while your license was active, they could pay you.

I was working at a firm in June and got my seller clients’ property under contract. Shortly after, my spouse got a new job, and we moved out of state. I left the firm to be unaffiliated, and my BIC assigned a new listing agent to finish the transaction. Can I be paid commission for procuring the buyer, marketing the property, etc.?

Maybe. Like the first example, the BIC can compensate you for brokerage activity that was completed with an active license. Existing firm policy or a signed referral agreement would be the best practice to indicate the amount of money that you earned prior to assigning the contract to another broker. If you did not get this in writing prior to leaving the firm, a conversation with the BIC would be appropriate. If you and the BIC can’t agree, then you may wish to consult a private attorney.

I was working for a buyer client under an oral buyer agency agreement for a few months, but the market has been rough. Finally, in late July, we got a property under contract, and we reduced our buyer agency agreement to writing prior to making the offer. A week before closing in September, the listing agent contacted me to ask why my license was inactive. I didn’t realize it was. Apparently, I forgot to complete my CE  and my license has been inactive since before we signed our agency agreement and got this property under contract. Can I be paid if I fix the CE issue and regain active status before closing?

Probably not. A licensee on inactive status cannot perform brokerage activity, including entering into agency agreements or assisting a buyer in making an offer.  You may be entitled to some compensation for brokerage work performed prior to going on inactive status and/or after regaining active status, so you should discuss this with your BIC.  If you signed any other contracts while your license was inactive, you cannot be paid for any work done on those transactions during the period of license inactivity.

My license is current but inactive. A friend of mine wants to buy a house. I know a great broker with whom I used to work. Can I be paid a referral fee for connecting the two of them?

No. Licensees must be on active status to conduct brokerage activity. The agent who accepts your referral cannot pay a referral fee to an unlicensed person, or a person with an inactive license. G.S. 93A-6(a)(9) specifically gives the Commission the power to take disciplinary action if a licensee compensates someone in violation of the License Law.

My license is active, but I do not work as an affiliated broker under a BIC as I just write referrals. However, my daughter is about to buy her first house. Can I work as her buyer agent for compensation?

Yes. Commission Rule A.0110(a) requires sole proprietors to also be a BIC if they are soliciting business, advertising, affiliating other agents, or holding trust monies. Since working as a buyer agent for a family member requires none of these, this brokerage activity would be acceptable as long as you do not offer to hold any escrow deposits.  You will need to enter into a written brokerage agreement prior to writing any offers and address in it your compensation.

My mom has an active real estate license but isn’t affiliated with a firm. I am about to buy my first house and trust no one more with this big purchase than my mom. When I asked her to represent me, she said she’d also give me the commission earned. Can she do that?

Maybe. While the License Law does not prohibit a broker from sharing all or part of their commission with a party to the transaction, the money cannot be paid outside of closing and should be reflected on the closing disclosure. If there is a lender involved, the lender will have to approve the concession, and not all borrowers may qualify. Be sure your buyer understands this – if the lender does not approve, the buyer cannot receive the concession in any other way.  If the lender approves it, and the amount is reflected accurately on the closing disclosure, then this should be fine. You should consult the closing attorney about how to accomplish this.

I’m a provisional broker with a signed buyer agency agreement. I recently changed firms, but my buyer clients decided they wanted to stay at the original firm. They don’t have a property under contract yet, but I have shown them dozens of houses and spent many hours working to educate them about the market, the standard offer to purchase contract, and the home-buying process. If they buy a house under my old firm, can I get any payment from that? And how would that money come to me?

Maybe. In this scenario, it would be best to have a signed referral agreement indicating your split of any commission before you leave the firm, or an established firm policy that addresses this scenario. If neither of these is the case, then you should discuss this with your previous BIC. If you and the BIC work out a payment agreement, your previous BIC can pay you through your new BIC. G.S. 93A-6(a)(5) indicates that a provisional broker cannot accept compensation for brokerage activity from anyone other than their BIC. . If you can’t come to terms with the previous BIC, you could consider consulting an attorney.

My BIC just fired me unexpectedly and removed me from affiliation with the firm. I have a transaction closing tomorrow. She said she won’t pay me. Is that legal?

Maybe. The firm owns the agency agreement and any commissions tied to it.  As in the example where a broker left the firm voluntarily, your BIC could choose to pay your commission at your previously agreed split, or a portion of it in accordance with any affiliation agreement or company policy. However, if you and the BIC are in disagreement about whether the money is owed, you will need to seek the commission through the appropriate legal process.  

I am retired, but I am considering taking a job as a “transaction coordinator.” I do have an active license, but I am not affiliated with any firms, and I don’t conduct brokerage activity anymore. In this new position, I will make sure all of the paperwork is signed and organized and that none is missing per a list of required documents on behalf of agents who hire me. Can I charge a flat fee for these services?

Yes, this job does not require a real estate license if there is no brokerage taking place and payment is made by a flat fee. You can refer to a prior article for other tasks that unlicensed persons or licensed persons not looking to perform brokerage services can perform.

In conclusion, an ounce of prevention is worth a pound of cure. If you are a BIC,  review your firm policies to see if each of these scenarios are clearly addressed. If you are an affiliated agent, it could be beneficial to consult your firm policy and your BIC in advance of any of these issues arising. Make sure you know how to remain compliant with the License Law and Rules, in addition to working within the bounds of your established firm policy, so that you are never faced with the sobering realization that you just worked for free.