A Massachusetts seller lists her home with Broker ABC at a 5% commission. The property sells, and a cooperating broker, Broker XYZ, represents the buyer. The listing agreement specifies that Broker XYZ will receive 2.5% of the sale price. Under Massachusetts law, which statement best describes the legal relationship regarding the cooperating broker's commission?
Correct Answer
B) Broker XYZ's commission is paid by Broker ABC from the total commission received, as the seller's contract is with Broker ABC
In Massachusetts, the seller's listing agreement is a contract between the seller and the listing broker (Broker ABC). The cooperating broker (Broker XYZ) does not have a direct contractual relationship with the seller for commission purposes. The MLS offer of cooperation creates a contractual arrangement between the two brokers. Broker ABC receives the total commission from the seller and then pays Broker XYZ the agreed-upon cooperative commission from that total. This is the standard commission flow in Massachusetts real estate transactions.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Antitrust violations in real estate occur when competing brokerages or agents engage in practices that restrain trade, reduce competition, or harm consumers through collusion. These violations are governed by the Sherman Antitrust Act and can result in severe penalties.
Broker supervision is the legal obligation of a designated or managing broker to oversee and be accountable for the real estate activities of all salespersons and associate brokers operating under their license.
Commingling is the illegal act of mixing client funds with a broker's personal or business operating funds, while conversion is the unauthorized use of client funds for the broker's own benefit. Both are serious violations that can result in license revocation.
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