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Can Commercial Real Estate Brokers Impose A Lien On The Sale?

For years, Florida law has provided commercial real estate brokers with a statutory right to impose a lien against the proceeds of a sale for payment of their commission. The lien right is clearly spelled out in Fla. Statutes § 475.703 and provides the broker a means to lien the seller’s personal property (net proceeds). However, Florida’s Third District Court of Appeal recently upheld a broker’s right to lien the real estate itself that is the subject of the transaction in order to cover the commission. So how does this ruling affect buyers and sellers in commercial sales?

Sellers need to be wary of broker liens that can encumber the property and kill a deal
Sellers of commercial real estate need to carefully review any listing agreements to understand whether their broker has a contractual right to lien the real property. If the listing agreement does provide for this ability, the seller must ensure that the property remains lien free so that the property can be transferred to the purchaser free and clear of all liens. If the seller is unable to keep the property free from liens, they run the risk of losing the deal. The best course of action is to carefully review all listing agreements with counsel prior to entering into them.

Buyers need to aware of any potential liens for commission and clouds on title
In a purchase and sale contract, it is imperative that the contract contain language requiring the Seller to transfer the property free and clear of all liens. Accordingly, it is imperative that all Buyers be diligent in their review of title commitments. If permitted, the buyer should also seek to review the seller’s listing agreement to review for provisions allowing the seller’s broker to lien the property. If such a provision does exist, then the Buyer must ensure that the property remain free and clear of any such liens through closing.

At the DeWitt Law Firm, we represent buyers and sellers in the purchase and sale of commercial real estate. Call one of our experienced real estate attorneys today to discuss your next real estate transaction.