An agent’s right to a fee under the written employment agreement with their broker

The agent of a broker has a right to a fee on transactions based on the agent’s written employment agreement with the broker, not under the separate listing agreement the broker has with the client.

Through the broker-agent employment agreement, the agent is entitled to share in the fees actually received by the broker on transactions in which the agent participates. [See RPI Forms 505 and 506]

Related article:

Form-of-the-Week: Agent Interview Sheet and Sales Agent and Broker-Associate Employment Agreements — Forms 500, 505 and 506

A licensed agent representing a broker acts as an agent of the broker. As the broker’s agent, the agent performs on behalf of the broker (as well as the client) all the activities the broker has been retained by the client to provide.

Further, an agent providing real estate related services on behalf of a client may not do so independently of their broker. Thus, an agent employed by a broker is referred to as “the agent of the agent,” acting as an agent of their employing broker. [Calif. Civil Code §2079.13(b)]

The listing agreement sets the scope of services the broker is authorized to perform while representing the client. The listing also authorizes the broker to serve as the client’s representative in the negotiation of a real estate transaction with others.

Further, the listing contains the client’s promise to pay a fee to the broker. This promise is given in exchange for the broker’s promise to use diligence in the broker’s efforts to meet the client’s objectives, known as their fiduciary duty


Editor’s note — The use of diligence is distinguished from a “best efforts” standard for broker performance under an open listing.

Related video:

Open Listing: a Unilateral Contract