Learn to Lien: Perfecting and Enforcing Broker Commission Liens Under Florida’s Commercial Real Estate Sales Commission Lien Act

Understanding how brokers can secure their commissions with a lien begins with a look at the unique statutory framework.

The Commission Lien Act

Part III of Chapter 475, Florida Statutes (the “Act”), creates a statutory scheme that allows a broker to claim a lien on a seller’s net proceeds to secure the payment of a broker’s commission. The lien does not exist automatically. The Act requires a broker to take specific actions to perfect and enforce its lien. This article gives a general overview of the Act’s requirements.

Required Disclosure and the Statutory Commission Notice

The first step in perfecting a broker lien under the Act requires a broker to provide the seller a disclosure of the broker’s right to a lien on the seller’s net proceeds, which must be included in the listing agreement or commission agreement. The second step is to timely provide a commission notice to the seller and the closing agent (if known).

The commission notice must be delivered within 30 days after the commission is earned, but no later than one day prior to closing. An untimely delivered commission notice will defeat the broker’s lien; however, there is an exception to the 30-day requirement if the seller entered into a contract without the broker’s knowledge.

The broker’s lien only attaches to the seller’s net proceeds from the sale. It does not attach to the property itself. Therefore, a broker will lose lien rights if a copy of the commission notice is not delivered to the closing agent before the disbursement of the seller’s net proceeds. Note that the Act applies only to the listing broker. A buyer’s broker has no lien claim against a seller’s proceeds under the Act.

Recording the Commission Notice and Closing Agent Duties

After timely delivery of a commission notice, a broker may record a copy of the notice. Recording is not required to perfect the lien, but it is useful for providing notice to the closing agent, as it will appear on a title search. A copy of the recorded commission notice should also be delivered to the seller and the closing agent (if known). If the notice is recorded, the broker must record a release within seven days after the commission is paid.

A closing agent who is timely notified or has notice of a broker’s commission notice (whether recorded or not) must withhold funds from the seller’s net proceeds sufficient to pay the claimed commission. If the seller and broker cannot agree on the disposition of the withheld funds or the amount owed, the closing agent is required to interplead the funds.

Final Thoughts

Like most statutory schemes, the requirements of the Act are both nuanced and strict. Failure to follow the Act could result in a broker losing lien rights. Additionally, Part IV of Chapter 475, Florida Statutes, provides for a broker to claim a lien for leasing commissions under the Commercial Real Estate Leasing Commission Lien Act.

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