Sometimes, real estate brokerage disputes pitting real estate brokers, realtors, mortgage brokers and mainly any other professional in the industry arise. You see, Brokerage is somewhat an ‘eat-what-you-kill’ business in a lawless frontier where verbal, handshake engagements more than pen and paper rule the industry.
Take the case of a pair of brokers at Newmark Knight Frank whose partnership run into problems following the fight over $1.1 million commission. Lawrence “Chip” Porter, a senior broker, was up in arms, claiming that he was entitled to the 50/50 sharing criteria after a successful lease of Brooklyn Whale Building’s Urban Soccer.
But while Lawrence’s argument was based on an alleged verbal agreement, George Valliades – a junior broker, had a different view. They had a back-and-forth meeting regarding Urban Soccer, and when the senior broker’s needs eventually couldn’t materialize, Valliades argued that he was under no particular obligation to share the haul with the one-time partner.
This is a classic example of the kind of disputes Queens & NYC realtors & brokers face. And so rife in the real estate industry are such phenomena that real estate litigation attorneys or other professional arbitrators frequently have to bring a ceasefire.
In the end, a norm that’s natural in the industry comes into play whereby everyone unanimously agrees with the phrase that “The broker will have to decide.” However, not everything here ends rosy, even when an arbitrator is hired since it frequently ends in a no-win situation.
In, comes the NY Real Property Law
Participants in the real estate industry typically earn their daily bread in form of commissions, although quarrels often arise from these payments. In New York, when similar commission disputes occur, it appears solving brokerage disputes is set to be a thing of the past. Thanks to the recently amended NY Real Property Law Section 294-b, an adequately licensed NY based real estate broker might commence a particular way meant at protecting one’s right to commissions earned from January 1, 2009.
The new law, loosely called “Commission Escrow Act,” mandates a duly approved realtor to claim commission for any sale and leasehold through an affidavit. The affidavit enables one to state the right to commission at the offices of the recording officer of the country where the property is situated.
Why an Escrow
Escrow is a pool of money set aside by a third party until a matter is adjudged to be complete. Here, both parties (buyer and seller) set aside a deposit and fight knowing too well that there’s a financial gain at the end. In New York, it is mandatory to do this money at the end.
Under the amendment, “Notice of Entitlement” gets expanded to accommodate right of transfers of cooperative units where they’ll be placed under the “lien docket.” Eventually, an escrow fund caters for every issue that frequently occurs.
But even when this law is yet to come into play, pundits have already expressed their reservations. First, it’s unclear what would happen if the seller doesn’t set aside an escrow fund or fails to invalidate the transfer of real property. However, the real estate litigation attorney will offer the right advice here.
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