Junior lien holders commission interference
A recent Iowa appeals court decision and rules under HAFA now make a junior lien holders unilateral demands to listing brokers to reduce commission clearly open for a claim of tortious interference.
Many of these junior lien holders are still attempting to restrict the listing broker's commission even though the first mortgageee has authorized the contracted compensation. Their demands to lower commission do not typically result in additional funds being paid to them.
Tortious interference claims may possibly include a trebled damages (3 times actual claim) plus attorney's fees and costs.
Many of these junior lien holders are still attempting to restrict the listing broker's commission even though the first mortgageee has authorized the contracted compensation. Their demands to lower commission do not typically result in additional funds being paid to them.
Tortious interference claims may possibly include a trebled damages (3 times actual claim) plus attorney's fees and costs.
Replies to This Discussion
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Permalink Reply by Tracy Howard on
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Steve,
Thank you for starting this discussion. I agree with you 100%.
In my view, there is really only one party who decides what our commission should be, and that is the seller who is listing his property with us. Obviously, if the seller wants us to list for 10%, and that is completely outside the market average for similar listings in the market area, then the 1st mortgage lender has every right to restrict the payment of that commission down to the average in the market area. However, if the commission amount is within the usual and ordinary range of rates for the marketplace, then nobody should be able to change it, including the first mortgage holder. I've heard sad stories of Realtors who allowed their commissions to be cut to 3.5% or 4%. Can you say, "WORKING FOR FREE"? If I am to work for my client, and for the lender, and for the junior, then I think my commission should be increased -- not cut.
Junion lienholders should never have a say in what the Realtor is being paid to market the property.
Tracy Howard -
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Permalink Reply by Stephen B. McWilliam on
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First mortgagees have been free to determine the commission they will authorize without liability as a tortious interference claim. They are allowed to protect their own financial self interest which is an allowable exclusion to a tortious interference claim. Granted, it probably wasn’t the smartest thing to do which I suspect is why the US Treasury has issued orders prohibiting these actions under the HAFA program.
Junior lien holders are in a totally different situation and I suspect they may find themselves as named defendants on class action lawsuits filed by brokers throughout the USA. I am aware of a law firm currently researching the viability and financial numbers involved in handling such cases. Stay tuned…. -
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Permalink Reply by Bill Black on
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Anyone know of any specific lenders that allow this?
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