Broker Can Assign Commission Directly to the Agent

Posted on May 1, 2011 by AAR

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ISSUE:

The broker has instructed the escrow company to pay the commission directly to the broker’s agent. A.R.S. §32-2155(A) requires a licensee to receive commissions only from their broker and also requires a broker to pay commissions only to licensees. Does this payment by the escrow company of the commission directly to the agent violate A.R.S. §32-2155(A)?

ANSWER:

Probably not. There are at least five exceptions to the specific language of A.R.S. §32-2155. One, if the broker is entitled to the commission as discussed above, the broker is probably allowed to assign the commission directly to the agent and the commission can be paid by the escrow company to the agent at closing. Two, a broker can assign the right to a commission to a non-licensee, e.g., a broker’s landlord who is owed rent. Three, a broker can pay the agent directly if the agent is now working for another broker. ADRE Substantive Policy Statement 2005.08. Four, after the death of the agent, a broker can pay the commission to the personal representative of the agent’s estate. Five, a broker can pay the commission directly to the bankruptcy trustee if the agent has filed bankruptcy.
Arizona REALTOR® Magazine – May 2011

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