How does a retainer fee work in new Form 201?

QUESTION: In the recently revised Exclusive Buyer Agency Agreement (Form 201), there is an option to charge a retainer fee. How do you recommend a firm account for a retainer? Would it be held in trust? Does NC REALTORS® have specific advice on how to handle accepting a retainer fee?

ANSWER: Updated Form 201, revised and released last week, continues to allow firms to charge a retainer fee. By default, the retainer fee is considered earned income upon payment, unlike other fees that may be charged by the firm and earned as outlined in section 4(a) of Form 201. The retainer should therefore be recorded in the firm’s operating account and not placed in a trust account.

A retainer should be paid when the agency agreement is signed unless otherwise agreed in section 12 of the form. Firms should establish a policy for providing clients with written receipts and maintaining copies of the agency agreement and receipt in the firm’s transaction file. This fee is credited toward the total agreed-upon fees. So, any commission payable to the buyer agent on a closing statement should be reduced by the retainer amount. If the buyer does not purchase a home, the firm keeps the retainer, and no further fees are owed.

For firms accepting cash retainers, policies should ensure proper accounting, receipt issuance, and Broker-In-Charge oversight for deposit into the firm’s operating account. However, accepting payment by check generally offers safer accounting practices.

Release Date: 10/24/24