Commission Agreement Between Brokers are essential documents in the U.S. real estate industry when two or more brokers collaborate on transactions. These agreements become necessary when brokers from different firms work together on deals, require structured referral arrangements, or establish ongoing cooperative relationships. The document typically includes detailed commission structures, payment schedules, territorial considerations, and compliance requirements with federal regulations like RESPA and state-specific real estate laws. It serves as a critical risk management tool by clearly defining each party's rights, responsibilities, and financial expectations.
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1. Parties: Identifies the brokers entering into the agreement, including their legal names, license numbers, and business addresses
2. Background: Establishes the context of the agreement and the parties' intentions to collaborate
3. Definitions: Defines key terms used throughout the agreement
4. Scope of Agreement: Defines the nature and extent of the cooperation between the brokers
5. Commission Structure: Details the agreed-upon commission splits and payment terms
6. Payment Terms: Specifies when and how commissions will be paid
7. Term and Termination: Defines the duration of the agreement and conditions for termination
8. Governing Law: Specifies the state law governing the agreement
1. Territory Restrictions: Defines geographical limitations of the agreement when brokers want to establish specific territorial boundaries
2. Non-Compete Clause: Restricts competitive activities between brokers to protect their business interests
3. Referral Procedures: Outlines specific procedures for handling referrals when agreement includes referral arrangements
4. Dispute Resolution: Specifies arbitration or mediation procedures when parties want to avoid court litigation
1. Commission Rate Schedule: Detailed breakdown of commission rates for different types of transactions
2. Territory Map: Visual representation of any geographical restrictions or territories
3. Required State Disclosures: State-mandated disclosure forms
4. Broker Licenses: Copies of current broker licenses
Relevant legal definitions
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