YOU HAVE QUESTIONS, WE HAVE ANSWERS!
VIVA ESCROW Q & A SEGMENT
(Real questions sent to us – verbatim!)
QUESTION:
The real estate broker gave us a commission disbursement agreement (CDA) that says to wire the agent’s share of the commission to the agent’s corporation. However, before we did so, the agent called and said his corporation was “suspended” and he is trying to fix that or set up a new entity, like an LLC. What should Escrow do?
ANSWER:
It is important to remember that the real estate agent works under a Real Estate Broker’s license and commission is paid to the Real Estate Broker, not to the agent. However, if the Broker sends escrow a CDA (commission disbursement agreement) which instructs how much to pay and to whom, most Escrow Officers will, as a matter of courtesy, honor the Broker’s request and pay accordingly. If there is a change to the Payee in that CDA, then the Broker will have to give us a new one. Remember that escrow only acts with proper instructions.
The Real Estate Broker takes responsibility for the information on his CDA, making sure that the listed payees have a current real estate license that would allow them to get paid. If the agent wants the funds paid to their corporate entity, the Broker should make sure this corporate entity belongs to the agent and is valid and in good standing. An entity “suspended” by the California Secretary of State cannot transact business until the suspension is removed and it is “in good standing”. Now, if the agent has to change his entity payee, that means the agent must provide his Broker with the correct information.
So to answer the question: Escrow does not want to pay the commission incorrectly. When there is a question, escrow can hold the agent’s commission until it is resolved and a new CDA is handed to us. If it cannot be resolved, we will send the agent’s commission check to him the way it shows on his license or, better still, we can send all of the commission to the Real Estate Broker and let the Broker handle disbursing it, as it should be to begin with.
EDUCATIONAL MOMENT (for escrow!):
The standard practice is that escrow will verify the licenses of the Real Estate Broker and Agent, usually at opening of escrow, especially when we have not dealt with them before. At opening, we also verify the status of the Seller and Buyer’s corporate entities. As more and more Agents and Brokers are asking us to make payments to their corporate entities, maybe we should also be doing the same verification before we send out their commission at closing? Something for us to think about.
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~ Funny Video of the Month ~
Living with AI – Alexa, shut up
This is like dealing with SS – Stupid Siri
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~ Quote of the Month ~
The longest 15 seconds in the world are those when you’re resetting the router, wondering if waiting 15 seconds actually does anything.
If you don’t know what a router is, Google it. Oh, wait, you need a functioning router to do that.
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My YouTube Offering for the Month
Full article on www.VivaEscrow.com
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You Have Questions? We Have Answers!
Juliana Tu, CSEO, CEO, CBSS, CEI, SASIP
“Escrow is my FOREMOST language!”
Advance Disclosure:
The opinions expressed in this blog are solely the author’s.
Your comments and viewpoints are always welcome.
Info @ VivaEscrow.com