Seller Lacks Funds to Pay Co-operating Brokerage

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The Seller cannot pay commission on the transaction. How does the buyer agent get paid? Do they sue the selling brokerage?


This situation actually arises quite frequently, but there is a simple, easy and straightforward solution.

All the money in the deal flows from the Buyer. The Buyer is your client and under the Buyer Representation Agreement (BRA) is obligated to pay you.

So, the deal is struck at 100%. The sum of 2.5% for your commission is paid to the Buyer’s lawyer in trust for you pending successful completion of the sale, 7.5% is paid as a deposit to the Listing Brokerage and the balance of the funds in the amount of 90% are paid on closing. I assume that there’s not enough money to go around to pay everyone who wants to be paid, but who really cares!

After closing, you get paid your commission by your Buyer directly through the Buyer’s solicitor. The funds were never held in trust for anybody other than the Buyer and you. So, both of you should be happy. One of the Seller’s creditors didn’t get paid in full. Maybe they will have to garnish wages or something. That’s not your problem.

Brian Madigan LL.B., Broker

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