Here's what I think......
In Florida it is perfectly legal to give commission rebates. The rebate just has to be disclosed to the parties of the contract (buyer and seller). By the way, 40 States allow commission rebates.
- The sharing of brokerage compensation by a licensee with a party to the real estate transaction with full disclosure to all interested parties is not considered a violation of Chapter 475, Part I, Florida Statutes.
Can a lender stop this from happening?
And what about the "Arms Length Transaction Affidavit (ALT)? The wording on these can be ambiguous to say the least.
The ALT from Suntrust states:"
- "Affiant further says that beyond any contractual sales commission owed to the Seller's Agent and/or Buyer's Agent, no party to this short sale transaction will receive any proceeds from the sale of the above mentioned property
The ALT from Wells Fargo reads:
- None of the parties shall receive any proceeds from this transaction except the sales commission.
Neither of these Affidavits, in my opinion***, would prohibit the seller from receiving a commission rebate. And when we team these with the Florida rebate law stating we only have to disclose the rebate to the parties of the contract.....the issue cloubs even further.
Is a rebate coming from the Broker "proceeds of the sale"?
And what about RESPA? RESPA requires that all monies related to the transaction be on the HUD. However, RESPA doesn't apply to all transactions including cash purchases and mortgages that are not Federally related
By the way. the Department of Justice is all FOR commission rebates as a commission rebate saves the consumer money in a real estate transaction. Rebates also help Brokers compete.
These are difficult questions and I think the courts will have to decide. What say you?
***I am NOT an Attorney. Nor do I play one on TV. This article is just my opinion. Do not rely on it as legal advice. Don't give your seller a rebate and tell your Broker ofrthe Judge that "Broker Bryant said it was OK". I didn't. What I'm really saying is SEEK LEGAL ADVICE.
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Comments
This is an interesting question. My first reaction would be that the receipt of any money by the seller, in the form of the commission rebate or otherwise, would be in direct violation of the terms of the lender's short sale approval letter. Most, if not all, approval letters explicitly state that the seller is to receive no proceeds from the transaction. While viable arguments can be made in support of both sides of the issue, I don't think the risk of a potential lawsuit is worth the reward of a partial commission. Regardless, I would disclose the existence of the seller rebate to the lender prior to receiving short sale approval.
Disclaimer: I am not an attorney and this is merely my personal opinion.