I had the opportunity to represent a broker who had a valid and enforceable exclusive sale listing agreement, who became a bit worried when his clients (the heirs to an estate) asked if he would take a reduced commission, because the fee just seemed so large. Yes, he sensed that the dreaded commissionectomy loomed around the corner, and that is when I got the call. I performed my own review of the claim, found the listing enforceable, the signed PSA was signed during the term; and even though the buyer had negotiated a reduction in price, there was still a deal and a viable commission claim. So far, so good.
I reached out to the seller’s attorney, asked if I could see the closing statement when it was ready, and asked to whom I could send my client’s waiver of broker lien. I received preliminary closing figures (ok, the commission was in there at the stated rate), and I was told the name and was given the contact information for the closer at the title company. Looking better all the time for my client. Maybe my client was just spooked based on the size of the fee and was just being extra cautious, and maybe even worrying too much. WRONG! An attorney should always trust his broker when the broker senses something can go wrong.
I sent the lien waiver to the title company, BUT I sent it with a conditional letter, indicating that the closer could only deposit the lien waiver into the closing escrow when she was prepared to disburse the commission in the stated amount to my client. And that conditional letter saved the commission—eventually.
I received a call from the closer the very next day, was told that the closing figures had changed, that the commission was no longer in the closing statement, and she asked what she should do with the lien waiver. My answer was to return it ASAP; and I immediately got started in drafting my notice of lien. I had the client execute it and recorded it that very same day. It turns out that my lien was recorded before the seller’s deed, because closing was delayed by one day. I then served the recorded lien on the seller with a copy to our friend the closer at the title company, and that is when the real fun began. The seller had changed counsel, and I was directed to the new attorney, who told me he thought that there was a breach of fiduciary duty, and that the commission would not be paid. I politely inquired as to the facts surrounding this new defense; patiently listened, provided all of the documents that the seller’s new counsel requested; and told him that if the deal closed and we were not paid, I would have to foreclose the lien and seek more than the commission.
He didn’t seem fazed, as they had closed. As I suspected, a multiple of the commission amount claimed in the lien had been escrowed. I followed with a call to the seller’s counsel, told him that my attorney fees would be added to the amount sought, and that I would file suit within three days. I also advised the seller’s previous counsel, as she seemed a bit sympathetic to our position. Surprise, surprise, the next call came from that seller’s first counsel. She was back in the driver’s seat, her clients were willing to settle, and just how much would it take? I added up my time and fees and costs, added it to the commission, added interest for the time after closing, and it was “Game On.”
We settled for almost 100% of the amount that I demanded which included the full commission, most of my fees, and all of the interest. So, my friends, what are the lessons learned:
- It ain’t over till it’s over (thanks Yogi).
- You NEVER give up that lien waiver unless it is conditionally deposited with the title company, it is your best leverage.
- Based on the size of the fee, the broker should get counsel involved when you first sense a problem, and be prepared to draft, record, and foreclose that lien; there is your next point of leverage.
Life and real estate are full of surprises, there is no substitute for healthy caution and timely intervention of counsel. All's well that ends well (thank you William Shakespeare)!