What fees should an agent receive upon termination?

May 01, 2022

I’m a broker and I recently terminated the services of one of my agents who signed the Texas REALTORS® Independent Contractor Agreement for Sales Associate (TXR 2301). Which fees should the agent receive upon termination?

You owe the agent any fees earned before the termination was effective.

The Independent Contractor Agreement for Sales Associate (TXR 2301) outlines the rights of the broker and agent concerning earned fees upon termination of agent sponsorship. According to Paragraph 16C of the contract, an agent’s fees are earned at the time a broker’s fees are earned under the applicable agreement for brokerage services—unless the fees are subject to arbitration or litigation. Each brokerage agreement defines when a broker’s fees are earned. Generally, a broker’s fees are earned when contracts or leases are fully executed.

Paragraphs 16G and 16H address the issue of fees payable to the departing agent if prospects are reassigned to another agent to complete a transaction. The parties could agree to other rules regarding this fee sharing, but a different agreement should be in writing to prevent disputes. Ultimately, Paragraph 21B outlines that an agent’s entitlement to earned fees that remain unpaid as of the termination of the agreement will be in accordance with the agreed-upon terms between the broker and agent provided in this section. Therefore, it is imperative that a fee schedule be attached or terms of another agreement outlining the terms of payment of such fees be listed, so that it is incorporated into the Independent Contract Agreement for Sales Associate to prevent disputes.

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