Commercial Broker Lien legislation passes out of the Michigan Senate
December 10, 2009
Legislation to protect commercial brokers against losing rightfully earned commissions made its way onto the Senate floor today, where it passed 27-10 (one Senator was absent). Senate Bill 610, which has been introduced by Senator Jason Allen (R-Traverse City) would create the "Commercial Broker Lien Act" and will allow a lien to be placed on commercial property for non payment of commission. Certain requirements will need to be present in order to record the lien including, but not limited to;
A written commission agreement must be present and the broker is entitled to the commission under terms of the agreement.
The broker records the lien before the conveyance of the property.
Many commercial brokers have reported difficulties in collecting commissions on deals that have taken months or even years to complete. Increasingly, our commercial members are finding themselves falling victim to, what has been termed in the industry as a "commissionectomy", especially in leasing situations. More often than not, the cost of pursuing a lost commission far outweighs the commission itself.
Another purpose of this legislation is to prevent future lawsuits in regard to commissions. While commercial real estate brokers make up a portion of our membership, it is necessary to do everything possible to avoid costly litigation procedures with buyers or sellers who might be looking to take advantage of brokers not wanting to lose a sale. Avoiding litigation is a good thing for all REALTORS®, whether they sell commercial or residential properties. Approximately two dozen other states already have commercial broker lien laws in place, including the neighboring states of Illinois and Ohio.
Senate Bill 610 now heads to the House, where it is expected to be taken up in the Regulatory Reform committee. The MAR staff will continue to meet with legislators in the House to express the importance for why this legislation is needed.