Members

Question: I will be leaving my current brokerage shortly and transferring my license to a new sponsoring broker. When I leave, may I take my clients and files with me to the new brokerage? I also have some transactions that might end up closing after I have moved to the new brokerage – do I still get paid on those deals? 

Answer: First, let us keep in mind that the clients have signed brokerage agreements with your current brokerage company and are subject to the terms of those agreements. A common situation or complaint is that a licensee is now soliciting “their own” listings in advance, or shortly after, their departure. As a word of caution, you should remember that it is a potential License Act violation and breach of the REALTOR® Code of Ethics to solicit the exclusive listing of a real estate firm. The general rule is that the brokerage agreement is entered into with the real estate brokerage company, so unless you have contracted otherwise with your sponsoring broker, you must not solicit those clients subject to an exclusive brokerage agreement. Any listings or clients that you might have will not automatically follow you.

If the client chooses to remove themself from a brokerage agreement, you should leave that to the client to pursue. The client should discuss the matter with the brokerage company directly or their own attorney for further advice on the terms of the agreement. Once again, this assumes that you have no agreement to the contrary with your former broker that allows for you to “take your files with you when you leave.”

Second, you should review the written agreement (i.e. independent contractor agreement or employment contract) that you have in place with your current brokerage to determine if you have negotiated terms that address this scenario. Remember that the general rule is that the transactions that you are involved in while at your current brokerage will belong to that brokerage, not to you personally. Generally, the commissions will be payable to the sponsoring brokerage firm. You might wish to examine your independent contractor/employment agreement with your sponsoring broker to review any provisions relative to payment of commissions for deals that are pending when you leave. Unless there is a specific provision in your contract or some office policy that provides for payment, it is quite possible that you would not be paid for deals pending when you leave. Thus, if you have not made provisions when you started with your sponsoring broker, in order to get paid you may need to remain with your sponsoring broker until the transaction is complete, or try to negotiate something before you leave.

Pursuant to Section 10-5(a) of the Illinois Real Estate License Act (the Act), a sponsoring broker may pay a licensee that they previously sponsored if the payment is for licensed activities performed while under contract with that broker. In addition, the broker and the prior licensee would want to review the employment agreement /independent contractor’s agreement to be certain that the broker agreed to pay commissions for pending deals.

Finally, please keep in mind that you can legally work for only one sponsoring broker. See Section 10-20(a) of the Act. Thus, to use a fairly common example, the general rule would be that you not attend the closing of a former client because your former company is still under contract with that client. You may not contact your former clients as long as that client is still under contract with your former sponsoring broker.

If you have any questions related to any contract that you have signed, you should visit with your attorney who can advise you as to your legal rights, duties and responsibilities under that contract.