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Pursuant to Florida’s Commercial Real Estate Sales Commission Lien Act, a commercial broker has a lien upon the owner’s net proceeds from the sale of commercial real estate for any commission earned by the broker under a written broker’s agreement.
According to the Act, the lien upon the owner’s net proceeds for a broker’s commission is a lien upon personal property, it attaches to the owner’s net proceeds only, and it does create a lien right against the real estate that is being sold.
As such, the broker cannot record a lis pendens against the real estate that was sold in order to force the seller to pay the broker’s commission. Instead, the Act provides that a commercial broker may give both notice to the closing agent and record notice of the commission due in the public records of the county where the land is located, and gain a lien on the net proceeds of the seller
Practice Tip to Residential Brokers: Residential real estate brokers have no lien rights either statutorily or at common law. They are, in fact, prohibited from placing liens for commissions in the public records.
The Legal Process
If a broker’s commission notice claiming a commission is delivered to a seller as required, and the seller disputes the claimed commission, the seller or broker may file a civil action in the county court or circuit court, whichever has jurisdiction over the claimed amount, of the county where the commercial real estate or a portion of the commercial real estate is located.
A commission notice made by a broker with respect to a commission claimed under the statute shall be in writing, signed, and sworn to or affirmed by the broker under penalty of perjury before a notary public and shall include the amount of the commission claimed by the broker.
It is important to understand that if a broker fails to deliver a copy of a commission notice to the owner and the closing agent before the disbursement of the owner’s net proceeds, the broker may not enforce a lien for the commission, and the delivery of a copy of a commission notice after such disbursement is ineffective.
What Are a Closing Agent’s Duties in a Broker Sales Commission Dispute
In the event of a dispute, the closing agent must seek adjudication by interpleader action or other legal proceeding. Unless otherwise agreed to by the owner and the broker in writing, the closing agent must deposit the net amount of disputed reserve proceeds in the registry of the court after deducting certain costs and fees and record an affidavit referring to a recorded commission notice, if any. Pursuant to the Act, the closing agent is entitled to attorneys’ fees and costs for filing the interpleader action.
Attorneys’ Fees & Costs
Pursuant to the Act, if the owner or the broker files a lawsuit, or if the closing agent files an interpleader action, the owner or the broker that is not the prevailing party is required to pay:
• The costs and reasonable attorney’s fees incurred in the action by the prevailing party;
• The costs and reasonable attorney’s fees incurred in the action by the closing agent; and
• The amount of any costs, recording charges, and service charges of the clerk of court.
Your Case
This summary on Florida’s Commercial Real Estate Sales Commission Act is is intended to provide you with practical and useful information on commercial real estate commission disputes in Florida. It is not intended, however, to substitute or take the place of legal advice. If you are seeking legal advice, please do not hesitate to contact our real estate law firm to schedule a complimentary consultation to discuss your particular matter.