Realtor Update: New Forms Released September 9, 2024

As of September 9, 2024, the Florida Association of Realtors (FAR) has introduced two crucial new forms to the FAR-BAR library. These forms—titled the “Seller’s Agreement with Respect to Buyer’s Broker Compensation” and “Credit Related to Buyer’s Broker Compensation”—are designed to address compensation challenges introduced by the evolving rules following the National Association of Realtors (NAR) settlement.

Real estate professionals in Florida now face new rules requiring Buyer’s Agents to enter into written agreements that disclose how they will be compensated. Traditionally, compensation was often assumed, or negotiated informally, but the NAR settlement has emphasized transparency, requiring more formal structures. These new forms aim to simplify that process, protecting both buyer agents and their clients from compensation disputes and ensuring clarity for all parties involved.

The Challenge for Buyer’s Agents in the Current Market

Under the current rules, Buyer’s Agents are required to establish clear compensation agreements before proceeding with real estate contracts. However, a common issue arises when Seller’s Agents are hesitant to establish compensation terms upfront, instead advising Buyer’s Agents to submit offers and “figure out the compensation later.” This leaves the Buyer’s Agent in a precarious position—submitting an offer on behalf of their client without knowing how or if they will be compensated.

In an apparent effort to address this potential concern, Florida Realtors has released two new contract riders:

1. Seller’s Agreement with Respect to Buyer’s Broker Compensation (CR-6 GG)

This form provides the Buyer with an important safeguard. It allows the Buyer to make their contract contingent upon the Seller or Seller’s Broker entering into a separate agreement with the Buyer’s Broker regarding compensation.

The main advantage of this form is that it gives the Buyer the right to cancel the contract if no separate compensation agreement is reached or if the terms of such an agreement are unacceptable. This creates leverage for Buyer’s Agents who need to secure proper compensation and eliminates uncertainty from the negotiation process.

For Buyers and Buyer’s Agents, this form will be a useful tool to ensure that the transaction can move forward without financial ambiguity. Without it, a Buyer’s Agent might otherwise submit a contract without any clear understanding of how or whether they will be compensated for their work, putting both the agent and the buyer at risk.

2. Credit Related to Buyer’s Broker Compensation (CR-6 FF)

This form applies when a Seller agrees to give a credit to the Buyer that is specifically intended to cover the Buyer’s Broker compensation.

It is particularly useful in situations where the Buyer has already entered into a separate Buyer’s Brokerage Agreement, and the credit is being applied toward that agreed-upon compensation. This form allows the Buyer and Seller to include the credit directly in the purchase agreement, clarifying the application of the funds and preventing any future disputes.

Using this form should increase transparency for both sides and reduce confusion about how the Buyer’s Broker will be paid. It should also provide a convenient way to facilitate the transaction when the Buyer is relying on Seller concessions to cover broker fees, aligning both parties’ expectations.

How These Forms Align with the New Legal Landscape

Both forms appear to be part of a broader shift toward greater transparency and accountability in the real estate industry, following high-profile legal cases like Burnett v. National Association of Realtors. As commission structures and buyer representation agreements evolve, real estate professionals must adapt to new standards.

These new forms address key pain points introduced by the NAR settlement and ensure that buyer agents can confidently enter negotiations with clear compensation agreements in place. They not only help mitigate risk for Buyer’s Agents but also provide Buyers with greater clarity and protection in their real estate transactions.

Next Steps for Real Estate Professionals

To stay compliant and protect their business interests, Florida real estate professionals should become familiar with these new forms and their implications for everyday transactions. Brokers should take the time to train their agents on how to properly use these forms, ensuring that compensation agreements are locked down before contracts are submitted.

At Munizzi Law Firm, we assist Florida real estate professionals with navigating the complexities of contract law, compensation agreements, and the current legal landscape. Whether you’re a broker looking to protect your agents or an agent in need of guidance, we’re here to help. Contact us today to ensure your practice is fully aligned with the latest FAR-BAR updates and to safeguard your transactions.

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