by: Michael L. Rich
The New Jersey Law Journal reports the filing of three putative class actions on March 16, 2011 alleging that real estate brokers defraud buyers and sellers by charging administrative fees for services covered by commissions. Specifically, the suits allege that Weichert Realtors and Prudential Real Estate Affiliates impose administrative fees of $200 to $275 on real estate transactions, notwithstanding the U.S. Department of Housing and Urban Development declaring last year such fees illegal. One suit filed in U.S. District Court in Camden, New Jersey alleges violations of the Real Estate Settlement Procedures Act. The two suits filed in Burlington County Superior Court claim violations of the state’s Consumer Fraud Act and the Truth in Consumer Contract, Warranty and Notice Act. More details to follow.
by: Michael L. Rich
What happens when a commercial real estate salesperson’s affiliation with a real estate brokerage firm terminates? What duty, if any is there to account for earned but unpaid commissions as of the termination date? Regulations of the New Jersey Real Estate Commission squarely address this issue. N.J.A.C. 11:5-4.1(e) provides:
"Upon the termination of the affiliation of a salesperson with a broker, the broker shall make a complete accounting in writing of all monies due the salesperson as of the date of termination and/or which may become due in the future. In the event any sums so accounted for are not in accord with the terms of the post-termination compensation clause in the written agreement between the broker and the salesperson, the broker shall give a complete and comprehensive written explanation of any difference to the salesperson with the accounting. Such accounting shall be delivered to the salesperson not later than 30 days after termination."
Failure to comply with this accounting requirement could subject the broker to potential fines or other penalties of the Real Estate Commission, or to civil action by the salesperson for money judgment for any earned but unpaid commissions.
Besides post-termination compensation provisions, the written agreement between the broker and salesperson frequently contains post-termination restrictive covenants such as confidentiality, non-solicitation and non-competition restrictions imposed on the departing salesperson. The enforceability of those post-termination restrictions is subject to the governing state law.