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Commercial Broker Lien Laws

January 31, 2013

Commercial broker lien laws allow liens to be filed on commercial properties for the full payment of commissions. In states that have enacted commercial lien laws, there has been a dramatic decline in commission collection litigation and arbitration.

Origin

Broker lien laws are a reaction to the problem of commercial brokers completing a commercial lease or sales transaction that is subject to a listing or commission agreement, only to receive a portion of the agreed upon fee, or sometimes no fee at all. Commercial brokers have then sought the statutory right to place a lien on the property in question as a means to ensure the commission would be paid.

Proposed Rule/Legislation

Twenty-nine states provide that a real estate broker may claim a lien under specified circumstances. Eighty-six percent of those jurisdictions have adopted broker’s lien acts or statutory schemes that authorize a broker or licensee to claim a lien arising out of his or her brokerage services. The other 14 percent include brokers’ services as a property improvement within their mechanics’ lien laws. A few jurisdictions provide other methods of creating security for a broker. For example, Oregon permits a broker to place a demand into a closing escrow if the seller disputes the broker’s payment.

What’s At Stake

Broker lien laws allow commercial brokers the ability to do their jobs without worry about getting paid their due commission as deals can take months and sometimes years to complete.

What NAR Is Doing

NAR Commercial has experts on call to assist states seeking to enact a broker lien law and consultations. In addition, REALTOR® Associations may apply for Issue Mobilization Program dollars in order to fund their broker lien campaign. Recently, the North Carolina Association of REALTORS® (NCAR) utilized these resources to assist them in the adoption of the Commercial Real Estate Broker Lien Act after fourteen years of seeking the adoption of this legislation.

A commercial REALTOR® elected to the North Carolina General Assembly, Representative Darrell G. McCormick, is chair of the House Commerce and Job Development Subcommittee on Business and Labor. Rep. McCormick introduced and championed the legislation.

NCAR Government Affairs Director, Cady Thomas, and members still needed support in overcoming opposition to the bill from the State Bar and the North Carolina Real Estate Commission and took advantage of NAR Commercial resources to procure expert testimony on broker lien laws.

How To Get Involved

If your state is fighting for a broker lien law or considering introducing broker lien legislation, contact NAR Commercial’s Vice President, Jan Hope at jhope@realtors.org for a consultation on legal resources available. For more information on the broker lien law visit NAR’s Field Guide on Broker Lien Laws which includes a link to NAR’s State Issues Tracker available only to REALTORS® with in-depth analysis of all twenty-nine jurisdictions’ language.

Find the Field Guide at www.realtor.org/library_secured/library/fg710. Finally, for the full list of programs offered available through My Realtor Party including but certainly not limited to the Issues Mobilization Program funds and the REALTOR® Candidate Training Academy visit www.realtoractioncenter.com.