Am I required to share my buyer agency agreement with the seller to prove compensation?

QUESTION: My buyer is currently looking to purchase a new construction home. The builder advertised potential cooperative compensation on their business website, and we are negotiating a purchase agreement. The builder is demanding that I send over a copy of the buyer agency agreement to show how much compensation I am owed. Am I required to send my buyer agency agreement to the builder?

ANSWER: No. While a listing firm or seller may request a copy of a buyer agency agreement, there is no obligation for a broker to comply with such a request.

Agents and their firms are required to ensure personal compliance with the new MLS policies, but there is no obligation to police other brokers or firms for compliance. The MLS will oversee compliance. This means that listing firms and sellers have no obligation to make sure that buyer agents are only getting paid the amount stated in their buyer agency agreement.

That said, agents do have a duty under both the License Law and the Code of Ethics to be truthful in their communications. A buyer agent who misrepresents what they are owed by their client could be subject to discipline. Moreover, any compensation stated in a buyer agency agreement must be a specific amount, not a range of compensation, and not open-ended (i.e., “whatever amount the seller is offering”). This means if cooperative compensation offered by a seller or listing firm is more than what the buyer has agreed to pay, then a buyer agent cannot receive such additional compensation unless the buyer agrees to it in writing.

Brokers should promptly share agency contracts with the lender and closing attorney involved in the transaction upon request. Failure to inform the lender of the buyer’s financial obligations and closing costs might result in the buyer being unable to close due to insufficient funds. Additionally, closing attorneys may request to see all contracts between the parties and their agents, along with any cooperative compensation agreements, to ensure a full and accurate representation of the transaction on all closing documents.

If a builder, or any other seller, insists on seeing the buyer agency agreement before they sign a purchase agreement or a Cooperating Compensation Agreement (Standard Form 220), a buyer agent should first obtain written permission from their client.

Release Date: 8/29/2024