Let’s examine NRS 645.280(2) “A real estate broker-salesperson or salesperson shall not be associated with or accept compensation from any person other than the broker or owner-developer under whom he or she is licensed at the time of the real estate transaction.” However, I am aware that several real estate and escrow companies do provide for the direct payment of a real estate licensee’s commission upon written approval from the licensee’s broker. I can certainly understand why some brokers will not allow for the direct payment of their licensee’s commission due to the plain language contained in NRS 645.280(2) “….accept compensation from any person other than the broker or owner-developer under whom he or she is licensed at the time of the real estate transaction.”
Recently, this direct payment of licensee’s real estate commissions from escrow has become an important issue. I have received dozens of phone calls and emails from real estate licensees from a certain real estate company whose broker/owner is not paying his agents according to the terms and conditions of the Independent Contractor Agreement he entered into with his licensees.
I’ll address in a future post what can be done about this! In the meantime, could this be avoided if the broker gave written permission to the escrow company to pay his licensee’s directly from escrow at the close of escrow?
On December 24th, 2020 I emailed Mr. Jan Holle, Chief Compliance/Audit Investigator, Nevada Real Estate Division, a man dedicated in his position as an important public servant and who is always quick to reply to my queries. I was looking for an opinion that would confirm my understanding that a broker could authorize escrow to pay its licensees directly from escrow. Mr. Holle’s replies are in red.
1) Are you aware of any Nevada real estate laws and/or regulations that would preclude an escrow company from paying a real estate licensee’s
commission directly from escrow with the broker’s written permission? “No. there is nothing specific prohibiting this. I did run this same scenario by our legal counsel early last year due to another inquiry and the requirement in NRS 645.280(2). Our legal counsel‘s thoughts were as long as the broker was directing the agent’s commission to be paid in this manner that it would not be a violation of the statute. Our legal counsel viewed the intent of the statute was to prohibit someone other than the agent’s broker paying commissions to the agent. Whether it actually is the agent’s broker paying the commission or the agent’s broker directing the commission to be paid to the agent isn’t really an issue. The key point is that the agent’s broker is authorizing the payment to the agent. Of course there would be no proof of the broker authorizing the payment unless it was written.”
2) If it is allowable, must the total commission be shown on the commission instruction and/or closing statement that the money first went to the broker but then passed through to the licensee? “There is nothing in 645 about what amount is shown where. However, the documents should not misrepresent the amount of commission paid or who it was paid to. The broker can authorize payment as stated. Whether it is a check, direct deposit, or other I don’t think is an issue as long as it is not an attempt to evade any other local, state, and federal law.”
Disclaimer: I am not an attorney and thus cannot offer legal opinions or legal advice. Mr. Holle is not an attorney and you’ll note he cited NRED’s counsel on their thoughts pertaining to NRS 645.280(2).