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What Are Commercial Broker Lien Laws?
Many states have been exploring, or have already enacted, a commercial real estate broker’s commission lien law. These laws allow for a commercial real estate broker to obtain and foreclose upon a lien as a legal remedy against a property if the buyer/seller or lessee/lessor fails to pay the broker the agreed upon commission, as their interests in the real property may apply.
Source: Commercial Broker Lien Laws (CCIM Institute)
Annual Report—Broker Lien Laws (National Association of REALTORS® State Issues Tracker Archive). Login required. Click on State & Local Resources, then click on State Issues Tracker. Click on Access the State Issues Tracker and click on "Broker Lien Laws" in menu on left for state-by-state overview.
State Summaries & Updates
What You Need to Know About Florida Commercial Real Estate Lien Law (Florida REALTORS®, Jul. 11, 2022)
- The lien belongs only to the broker and not to an employee or independent contractor of the broker.
- The lien for commission arising under the law cannot be assigned and may not be enforced by a person other than the broker.
- The commercial sales lien law does not apply to an agreement between a broker and a buyer for compensation of services. However, the commercial lease lien law could apply to a tenant agreement.
- A broker must disclose to the owner at or before the time the owner executes the brokerage agreement that this law creates lien rights for a commission earned by the broker. The statute also states "a broker may not enforce a lien under this part for a commission earned under a brokerage agreement for which the disclosure required by this subsection was not made." (Section 475.703(5) & 475.803(6), Florida Statutes)
Know Before You Close: 3 Important Aspects of Commercial Liens in Arizona You Don’t Want to Overlook (MacQueen & Gottlieb, PLC, Mar. 2, 2021)
These brokers can acquire lien rights for their commission amount once these terms are met:
- There is a written agreement establishing the commission or compensation of the broker with clear notice that lien rights might arise if the owner fails to pay.
- The broker finds a tenant or entity who is willing and able to sign an acceptable lease agreement with the property owner.
- The broker complies with the requirements of the lien process.
- All payment conditions are satisfied as detailed in the written compensation agreement.
Lien on Me: Understanding the Commercial Real Estate Broker’s Lien Act (Robbins DiMonte, Feb. 2, 2021)
Illinois allows real estate brokers to place liens for earned commissions on commercial real estate as a way to force payment when a seller or buyer attempts to circumvent payment to the broker. The act is known as the Commercial Real Estate Broker Lien Act, 770 ILCS 15 et. seq. This article addresses the basics on how the act works.
Mountain Law: Realtors Have New Power to Collect Unpaid Commissions (Summit Daily, Jun. 1, 2020)
The new broker lien law does not apply to all transactions … and brokers must carefully satisfy its requirements to enforce their lien rights … but, where the law is applicable, it may prove to be an important tool for commercial real estate brokers to obtain their earned commissions.
The Obscure Commercial Real Estate Broker’s Lien Act (Gross, Romanick, Dean & Desimone)
In order to record the lien, the broker must have a written agreement signed by the owner for the payment of a leasing commission. This requirement applies to both the landlord’s broker and to the tenant’s broker. The lien is perfected by recording a memorandum of the lien in the clerk’s office of the circuit court of the county/city where the commercial real estate is located.
eBooks & Other Resources
The Encyclopedia of Commercial Real Estate Advice (eBook)
A Guide for Commercial Real Estate Agents (eBook)
Mastering the Art of Commercial Real Estate Investing (eBook)
The Residential Agent's Handbook for Commercial Real Estate (eBook)
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