INDEPENDENT CONTRACTORS AGREEMENT: BMC # 2

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AGREEMENT

Independent Contractor

brokerindependencemi-resize-600x338Contractor agrees to work for Broker as an Independent Contractor, and not as an employee; however, Contractor understands that Broker may be legally accountable for the activities of the Contractor. All costs and obligations incurred by Contractor in conducting his/her independent business shall be paid solely by Contractor, who will hold Broker harmless from any and all such costs and obligations. The contractor will act independently as to the management of his/her time and efforts and will be responsible for all of his/her expenses, such as association dues, licensing renewals, pagers, cellular telephones, etc., as such costs are incurred. Contractor shall be an independent contractor for federal tax purposes, state tax and unemployment purposes, and state worker’s compensation purposes.

Contractor understands and agrees that because Contractor is an Independent Contractor and not an employee of Broker, Broker will not withhold any Federal or State Income Tax, Social Security (FICA) or Unemployment (FUTA) taxes from Contractor’s commissions paid. The contractor is personally responsible for paying any and all Federal and State Income, Social Security and other taxes, and for maintaining all expense records as required by law, and represents to Broker that all such amounts will be duly withheld and paid. Contractor shall indemnify and hold Broker harmless from any liability or costs thereof. Contractor further understands and acknowledges that Broker provides no Workman’s Compensation coverage. Contractor hereby specifically waives such coverage and represents to Broker that he/she understands that, if Contractor desires such coverage, Contractor must personally obtain such coverage directly from the State of Arizona or an insurance carrier.

The contractor will not perform under this Agreement for Broker or on Broker’s premises any activities that are not known to and authorized by Broker and which are not “professional real estate activities” as provided by law. All remunerations of Contractor by Broker shall be solely and directly related to sales or other output as specified in this Agreement and not the number of hours that Contractor may have been worked.

In this section of the sample agreement, it is acknowledged that the salesperson (contractor) has agreed to work for the broker as an independent contractor and not as an employee.  However, it is acknowledged that the DB is accountable for the activities of the Salesperson.  It goes on to say that the Salesperson is responsible for the costs of operating his or her independent business and the contractor has agreed to hold the broker harmless from any such costs.  The provision then clarifies the types of expenses that the sales person may incur and their resultant responsibility for them.  In addition, the provision confirms the status of the contractor for federal tax purposes, state taxes, and state worker’s compensation.

The provision goes on to provide that the Broker will not be taking out any federal or state tax withholdings, Social Security (FICA) or any other withholdings.  The responsibility for any items that would normally be withheld for an “employee” by an employer are the responsibility of the contractor.  The contractor also agrees to hold the broker harmless from these costs as well.  The Contractor further acknowledges that the Broker will not be providing any Workman’s Compensation coverage.  It affirms that the contractor must obtain this coverage through the State of Arizona or an independent insurer.  Finally, it acknowledges that the contractor’s compensation will not be based on the time contributed to the activities in real estate sales but will be directly related to sales or other output as specified in the agreement.

Quick Quiz

Fill in the Blank:
The for any items that would normally be withheld for an “employee” by an employer are the responsibility of the contractor. .

 License in Good Standing.

The contractor is and shall remain licensed and in good standing with the Arizona Department of Real Estate, throughout the term of this Agreement. Contractor will exert his/her best efforts in all activities related to the listing, selling, leasing or exchanging of real property, and will in all ways conduct him/herself in full compliance with any applicable federal and state law and the Rules of the Department of Real Estate, and in a way which reflects the high standards of the Broker.

In this section, it is acknowledged that the contractor will remain licensed and in good standing with the ADRE throughout the term of his or her employment.  The provision also states that the contractor will use his or her “best efforts” in activities related to listing, selling, leasing or exchanging real estate.  Also, the provision acknowledges that the contractor will conduct himself or herself in compliance with the applicable state and federal laws along with the rules of ADRE and maintain high standards of the broker in their business.

 Association Membership:

REALTOR [Optional].Within _____ days of the date of this Agreement, Contractor will become and remain a dues-paying member of the _______________ Board of REALTORS®, and will adhere to the REALTOR® Code of Ethics, as well as the Multiple Listing Service Rules and By-Laws pertaining to listings, lockboxes, etc.

This provision addresses that the salesperson will become a member of the Association of REALTORS® and identify which local association they are choosing to be a member of.  It does provide for the contractor to acknowledge the effective date of their membership.  This is regarded as optional; however, most brokers who provide residential real estate services do require their Salespersons to join a REALTOR® Association.

Quick Quiz

Fill in the Blank:
This provision that the salesperson will become a member of the Association of REALTORS® and identify which local they are choosing to be a member of.

Automobile Insurance

 Contractor will utilize his/her own automobile, and will maintain a minimum images-3$100,000/$300,000 [or list higher amount] liability and property damage insurance policy, naming Broker as a co-insured, covering each and every vehicle used to transport third parties or to show and inspect properties, and shall furnish a copy of said policy to Broker upon request.

This provision establishes the minimum insurance coverage that he or she will maintain on their automobile and also requires the contractor to name the brokerage as a co-insured on the policy.  This also establishes that this minimum coverage must be on every automobile that the contractor uses to transport third parties to show and inspect properties.

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