INDEPENDENT CONTRACTORS AGREEMENT Part 4: BMC #2

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Termination:

This Agreement may be terminated by either party upon thirty days’ written notice. [or specify other reasons for termination]. [Optional:] It is agreed Broker images-1or Contractor may terminate this contract by direct oral notice (in person or by telephone) or by written notice (hand delivered or any other method that is actually received by the other party) to Contractor or Broker for any reason whatsoever, with or without cause. In the event of termination for any reason, it is agreed Contractor shall be paid all commissions due within _____ working days after termination of this Agreement. Contractor acknowledges that Broker has made no promises as to the extent of work opportunities to be presented to Contractor and no promises as to the longevity of this independent contractor agreement.

This states that the agreement can be terminated by either the contractor or the broker for any reason whatsoever and the allowable method or methods of the termination.  There is usually a minimum amount of time established for the termination to take effect (i.e., 30 days) and also establishes how any commissions due to the contractor will be paid after their termination.

Controversies

In the event of disagreement or dispute between the parties to this Agreement or others, such disputes shall be handled as follows:

(A) Ethical Grievances: Ethical grievances with parties outside of Broker which cannot in the opinion of Broker be resolved by the parties in the method provided by the Broker Policy Manual, or as provided herein, shall be submitted to adjudication before the Board of REALTORS® unless initiated appropriately at another REALTOR organization elsewhere by the outside party, according to such organization’s rules and regulations. Mandatory fee and claim arbitrations initiated by persons or organizations outside of the Broker may be resolved by Broker as provided below.

(B) Grievances Concerning this Contract or Otherwise: [Optional:] Grievances between Broker and Contractor concerning the enforcement of this Agreement and any other grievances not otherwise disposed of in this Agreement shall be exclusively arbitrated by the American Arbitration Association (“AAA”) in the City of Phoenix, State of Arizona, before a single arbitrator, according to the AAA rules and regulations for commercial disputes except as modified in this paragraph. The aggrieved party shall commence the arbitration by engaging the AAA and each party shall pay their requisite fees due it for commencement. The arbitrator shall award all arbitration costs against the non-prevailing party. [Optional:] No attorney’s fees shall be awarded to the prevailing party in any such proceeding.

(C) Disputes Involving Contractors: In disputes involving salespersons or associate brokers licensed under Broker, Broker has the exclusive authority to adjudicate or settle professional, business, ethical, commission and administrative disputes between Broker or Contractor and others, or two or more Contractors or Broker arising out of real estate matters or otherwise in service to the Broker and Broker’s decision shall be final. The broker may, at its election and in place of making the decision itself, refer the matter to the REALTOR organization as provided above, or at Broker’s election, it may refer the same to arbitration as set forth above.

This provision establishes how any controversies or grievances will be handled internally in the brokerage or externally by another entity.  This includes ethical grievances that are handled by the Association of REALTORS®, grievances between broker and contractor, and disputes involving contractors within the brokerage.  This should be well-defined and there should be a process that should be followed should a grievance occur.

Quick Quiz

Fill in the Blank:
This provision how any controversies or grievances will be handled internally in the brokerage or externally by another .

DISPUTES INVOLVING COMMISSIONS:

(A) Origin of Fees:  All commissions or fees from professional real estate activity by any Contractor imagesbelongs to Broker, and no Contractor has a lien upon or interest therein, except as provided herein.

(B) Contractor’s Rights Regarding Fee Disputes Between Contractors: Broker has the exclusive right to settle differences regarding compensation between Broker and Contractors licensed with Broker and Broker’s decision shall be final and binding. All compensation splits between Contractors must be in writing in the form supplied by Broker and must be approved by Broker. No Contractor shall have any cause of action against Broker or its principals or a fellow Contractor for any compensation or share of professional fees between Contractors which is not evidenced in writing either on the face of the listing, the face of the transaction or by separate signed document. The Contractor is responsible, if he or she is aware, to notify all principals to any real estate transaction in writing of any compensation paid from the transaction to any other real estate licensee, naming the other licensee, if the notice is not otherwise contained on the face of the transactional documents signed by the principals.

(C) Contractor’s Rights Regarding Fee and Arbitration with Persons or Entities Outside of Broker: In fee disputes or arbitration with persons outside of Broker, Broker shall have the final say in whether commission claims or defenses are pursued and the compromise of any disputes with outside licensees, customers, clients or others regarding the receipt of or payment of commissions.

Commissions: As to any commission as provided by this Agreement:

Collection:  Broker will have no duty to collect any commissions due to Contractor, but in the event Broker so elects the legal costs for the same shall be split between the parties on the same basis as the commission split. The contractor may not take legal action for collection of commissions without the advance written consent of Broker and Broker shall be held harmless. In the event Broker elects to pursue a collection, Broker may in its sole discretion require Contractor to post an advance sum of money to defray collection costs. Commissions are payable only when received and then not later than _____ business days after receipt.

Unpaid Commissions:  Upon severance: Commissions earned by concluded and binding deals to which there is no other binding act required but which are still unpaid at the time of the termination of this Agreement, shall be split when and if received as follows: [Describe fee splits for other pending transactions]. In any event, if this Agreement is terminated by reason of any violation of its terms by Contractor, Broker may withhold and remove from such commissions such sum as will compensate it for any damages suffered by it by reason of the acts or omissions of Contractor or by reason of such termination, paying the balance, if any, over to Contractor.

  1. Offset: Contractor agrees that Broker may offset sums due it from sums due Contractor and may charge Contractor directly for sums due at any time, which sums Contractor agrees to pay promptly.
  2. Indemnity for Legal Claims: Contractor’s due and unpaid commissions may be held to defray or applied against the indemnity Contractor has promised to broker for unsatisfied contingent or pending client or customer complaints, legal or ethical claims, and any such withheld sums shall bear no interest.

The Dispute Involving Commissions provisions are often extensive in that it addresses commissions by defining the origin of the fees, the contractor’s rights regarding any fee disputes with another contractor in the brokerage and contractor’s rights regarding fee disputes with persons or entities outside of the brokerage.  The provision also addresses commissions and how the costs of collection shall be handled between the contractor and the broker.  The provision also addresses pending commission splits after the contractor terminates with the broker.

This provision also may provide for offsetting any such pending commissions with any costs due from the contractor to the broker as well as any commissions that may be held in anticipation of any costs for defending anticipated legal claims.

Severability

Severability  means that if any part of this Agreement is declared by an arbitrator or a court to be invalid or unenforceable, the remainder shall be of full force and effect and liberally construed to effectuate the intent and purpose of this Agreement.

This standard provision establishes that if any condition in the contract is unenforceable due to a provision of law or decision of judge or arbitrator, the remaining conditions of the contract will remain fully enforceable.

Assignment & Delegation:

No interest of Contractor herein can be delegated, subcontracted, sold or assigned. The contractor will assure that no person who is unlicensed in real estate assists Contractor in any way which would be deemed the rendering of “real estate activity” as described by law. Contractor hereby indemnifies Broker from any and all claims and liabilities or damages generated by Contractor’s use of assistants or employees.

This establishes that no interest of the contractor can be delegated, subcontracted or assigned.  The contractor also assures the broker here that any activity performed by an unlicensed assistant shall be activity that cannot be deemed “real estate activity” as described by law.

Quick Quiz

Fill in the Blank:
The also assures the broker here that any activity performed by an unlicensed assistant shall be activity that cannot be deemed “real estate activity” as by law.

Modification:

No part of this Agreement may be amended or rescinded except by writing signed by both parties.

This is also a standard provision that no part of the agreement shall be modified or amended or changed except by a writing signed by both parties.

Waiver of Breach:

Any failure by Broker to insist upon strict adherence to any term(s) of this Agreement on any occasion shall not be considered a waiver or deprive Broker of the right after that to insist upon strict adherence to any term of this Agreement.

This condition states that any failure of the broker to require strict adherence to any term or condition of this agreement shall not be interpreted to be a waiver or deprive the broker of the right to enforce such adherence in the future.

Binding Effect:

This Agreement shall be binding and inure to the heirs, successors and assigns of the parties (although nothing herein will waive the earlier prohibition against assignment).

This provision states that the agreement shall be binding upon ay heirs, successors or assigns of the parties.

Office Policy & Guidelines:

The broker has the right to promulgate office policies or administrative and business rules and regulations from time to time to properly effectuate its business. Such rules and regulations shall become a part of this Agreement, and the terms of it shall be binding on Contractor within ____ hours of providing notice to Contractor.

This establishes the right of the broker to promulgate any administrative or business rules and policies enacted by the broker to effectuate the business and that such rules and policies will become a part of the agreement.

Recovery of Expenses:

The parties agree in the event of a breach of this contract; the breaching party will pay the other party costs and reasonable attorney fees incurred because of the breach whether a lawsuit is instituted or not.

This establishes that if any party takes action against the other party because of a breach of the contract, the breaching party shall be responsible for the non-breaching party’s costs and reasonable attorney’s fees.

Addendums & Exhibits:

The final portion of the agreement may have addenda and exhibits such as the commission schedule or an acknowledgment that the contractor has read and agreed to the policies contained in the Broker’s Policy Manual.  After this, there is usually the place for the appropriate signatures of the parties and dates.

Quick Quiz

Fill in the Blank:
This establishes that if any party action against the other party because of a breach of the contract, the breaching party shall be responsible for the non-breaching party’s costs and reasonable attorney’s  .

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