Contracts are an everyday fact of life for those in real estate. One contract that is an integral part of every transaction is the brokerage agreement. This formal agreement outlines the details between the buyer or seller and their real estate agent. As with any legal contract, it is essential to read through it before signing to ensure that everyone understands the scope of duties in the agreement.
Important considerations to note
This agreement is generally between the buyer or seller and their broker, who represents them. Common details include:
- Limitation on the time it involves
- Restriction on the time of the broker’s representation
- The scope of tasks, including validating the title, confirming the zoning, checking for environmental issues, and other details
- Who is obligated for ordinary expenses and whether there is a cap on them
- Whether the broker handles other roles, such as leasing, after the transaction is complete
- Whether there is indemnification
- How to terminate the agreement if there is a dispute
Other issues may arise
Sometimes a dual agent represents both the buyer and the seller. This arrangement can lead to a seamless transaction, but it’s important to remember that their allegiances are split – and it should be a red flag if they appear to show bias toward one client or the other.
Reviewing the details
Regardless of how often the broker uses the contract, altering the details as needed. These contracts can be very complex and involve large sums of money, so it is a real benefit to have an attorney who handles real estate law and contracts to review its’ details. Doing this better ensures that the agreement protects the interests of those who sign it. They can also help enforce agreed-upon conditions if there is a potential breach of contract.