Commission Escrow Act
As the Nassau County Clerk, I would like to inform you about
a recently enacted New York State statue that expands your rights
as a broker: the Commission Escrow Act. Effective
January 1, 2009, this amendment to Section 294-b of the New York
State Real Property Law protects the rights of brokers to receive
their commission after the sale of a residential property by requiring
a seller to place a broker's commission funds in an escrow account
when there is a dispute over the payment.
brochure explains the parameters of the Commission Escrow Act, as well
as the procedure by which brokers can receive benefits under this law. The
process begins here at the County Clerk’s Office, with the filing
of an Affidavit of Entitlement to Commission by the broker. If
you have any further questions about the Commission Escrow Act, please
feel free to contact the County Clerk’s Office. We look
forward to assisting you.
The Commission Escrow Act
The Commission Escrow Act addresses the situation
in which a seller does not pay a broker the full commission upon
Act requires the seller to deposit any amount not paid to the broker
(or the net proceeds of the transaction, whichever is less) with
the County Clerk. The Act went into effect on January 1, 2009
and applies to 1 to 4 family dwellings, individual condominium units
and individual co-op units.
To be in compliance with the new law:
- Brokers should have a written listing agreement
signed by the seller.
- The listing agreement must contain the
following disclosure language in clear and bold face type:
“At the time of closing, you
may be required to deposit the broker’s commission with the County Clerk in
the event that you do not pay the broker his or her commission
as set forth herein. Your obligation to deposit the broker’s
commission with the County Clerk may be waived by the broker.”
If the listing agreement does not include this language, the seller
is not required to escrow the disputed amount. The
listing agreement must state the seller’s address, separate
from the address for the property to be sold (even if the two addresses
are the same).
Note: The Act does not create a lien or encumbrance
on the property, therefore a violation of the Act will not invalidate
a transfer of property or prevent a subsequent buyer from taking
clear title to the property.
Filing An Affidavit of Entitlement to Commission
The Affidavit of Entitlement to Commission is a sworn statement
by the real estate broker asserting that he/she is entitled to the
commission as set forth in the listing agreement due to the fact
that the broker produced a buyer for the residential property.
The affidavit must include:
- Name and license number of the broker
- Name of seller or other party responsible for paying commission
- Name of person authorizing sale (if other than the seller) and
date of said authorization
- A copy of the brokerage agreement
- A description of the property
- The amount of commission
- A description of brokerage services, and dates
When filing an Affidavit of Entitlement to
Commission at the County Clerk’s Office, brokers should bring
three copies of the affidavit and listing agreement: one for the
County Clerk to file, one for the seller, and one for the broker.
The Clerk should stamp all three copies as proof of filing.
There is a $95 recording fee, $150 per block fee, and $5 per page
fee for filing the affidavit with the County Clerk.
Please contact the Nassau County Clerk’s
Office at (516) 571-2664 with any questions.
Procedures to Follow:
- The broker files an Affidavit of Entitlement to Commission with
the County Clerk and pays the appropriate filing fees after the contract
is signed and prior to the closing.
- Within five days of filing, the broker must
serve the seller with notice by mail or personal delivery to the
address in the listing agreement. If closing is to occur within five days of filing
the affidavit, the broker must serve by personal delivery. If
there are multiple owners, service upon one is sufficient.
- Along with the affidavit, the broker must
mail or deliver to the seller a $25 check payable to the Nassau
- The broker must provide a copy of the affidavit
to the seller’s attorney by mail, fax, e-mail, or personal delivery, within five
days of filing.
- If the seller refuses to pay at the closing,
the seller must deposit the disputed amount (or the balance of
the purchase price, whichever is less), into escrow with the County
Clerk along with the brokers $25 fee. (If the seller fails to deposit the monies, the seller
must immediately return the $25 fee to the broker. If the broker
is subsequently determined to be entitled to the commission in a
lawsuit, the broker can recover all costs and reasonable attorney’s
- The County Clerk will deliver the money to the County Treasurer,
where it will remain until a court order for payment is entered.
- If the broker has not commenced an action within 60 days after the
escrow deposit, the seller may petition the court to have the money
returned to him/her. The broker must commence an action within six
months of the date of the escrow deposit.
- If the seller fails to pay the commission and the broker succeeds
in his/her claim, the broker is entitled to the amount of commission
due, plus costs, filing fees, and reasonable attorney fees.