Posted on Tuesday, February 11th, 2020

What governs, the executed contract between the parties or the listing agreement?

real estate closingQuestion:

The executed contract discloses a 3.0% commission to the cooperating broker.  The listing discloses a 2.5% commission to a cooperating broker.  Per the contract, I collected 3% for the cooperating broker.  Closing is today and the sellers’ attorney says to reduce it to 2.5%.  What governs, the executed contract between the parties or the listing agreement?



A purchase and sale agreement that mentions commission does not control the broker unless, of course, the agent or broker signed the contract. Otherwise, the broker has a right to stand on the commission advertised. In the scenario, the seller signed the contract, which was HIGHER than the listing. As such, they might be liable for 3%. Maybe the contract was prepared by the buyer’s broker, who inserted the wrong amount without anyone noticing. It seems to me that the real estate contract is an agreement between the buyer and seller and should not change the listing agreement between the seller and the broker. The “FARBAR AS IS” form states that the commission should be paid under the separate brokerage agreement. Usually, percentage to brokers information is inserted in contracts for the benefit of the closing agent but should not be binding between broker and seller.

If this is a residential contract, the MLS should reflect the amount of the commission that is payable to the cooperating broker. If the listing agreement states 2.5%, you cannot increase that amount to the cooperating broker.

If they dispute it, tell them that you will hold the total amount payable under the listing agreement in escrow until they can agree. For most situations, I would propose an escrow, but it may be useful to indicate you will immediately after closing interplead the entire commission into the circuit court and let them fight it out there. Nothing gets someone’s attention more than an interpleader. “What do you mean I have to get an attorney on this?” I am betting the selling agent’s broker will get it resolved in short order.

Additionally, the FARBAR AS-IS contract has language on the signature page that explicitly states that the contract cannot be used to modify the compensation outlined in MLS.


For all your real estate closing, contract and listing agreement question, contact the Orlando Real Estate Attorneys at Nishad Khan today!

Tuesday Takeaway 2.11.20