Broker Can Deduct from Agent’s Commissions for Payments Made by Broker

Posted on July 1, 2011 by AAR

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ISSUE:

The buyer claims that the agent lost the buyer’s $1,000 money order to be used as earnest money.  The agent denies that the agent lost the $1,000 money order.  The buyer got a judgment against the agent and the broker in small claims court for $1,000.  The broker has now paid $1,000 to the buyer.  The broker and the agent have no written employment agreement. Can the broker deduct from the agent’s commissions the $1,000 paid to the buyer?

ANSWER:

Probably.  Under A.R.S. §23-352, the broker is entitled to deduct from the agent’s earned commissions any reasonable expenses paid by the broker on behalf of the agent.

Note:  Most brokers have employment agreements with their agents that authorize the broker to deduct from the agent’s commission any reasonable expenses paid by the broker on behalf of the agent. 

Arizona REALTOR® Magazine – July 2011

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