BY: JIM HOCHMAN
Now that brokers have lien rights in 32 states, more if additional
state legislatures consider a new lien act in the future, it is
important to use lien rights wisely, and to waive those rights
very carefully. In the broker lien states, for the vast majority of
transactions, both sales and leases, it is customary for the closing
agent or landlord to request a lien waiver from the broker when
paying a commission. "Just sign our standard form, and here is
your check." At that point, with no apparent resistance to paying
your fee, and no visible competing claims, your inclination is
to just sign that "standard form," collect the check, and head
happily to the bank.
But, you might wonder, is there really such a thing as a standard
form for any document? On reflection, your experience should
warn you that every document is drafted on behalf of a party by
its own counsel and therefor benefits the drafing party. Could
there be a problem?
I have read each of the 32 broker lien acts; and each of them
requires a broker receiving a fee to provide a waiver (whether
partial or full) in exchange for payment or after payment has
been received. However, only Michigan mandates the form of a
waiver. Most important: none of the lien acts require the broker
to give an affidavit, or to provide anything more than a waiver of
lien rights in exchange for a specified amount.
Nonetheless, many of these so-called "standard forms" contain
both a waiver and a second part, usually termed a "Broker's
Affidavit." Just what is requested in that affidavit, by whom, and
why it should cause you to worry.
The party paying the commission, seller, landlord, or a title
company disbursing a fee from escrow, asks for the affidavit to
• The party executing the waiver is authorized to do so.
• The amount of the fee to be paid is the entire amount
claimed, so the waiver constitutes full satisfaction of the
I would suggest that these first two requests for representations
are reasonable, and you should, if asked, agree to make them.
However, that seemingly innocuous Broker Affidavit usually
"Broker warrants and represents to the best of its knowledge that
it is the only broker entitled to and seeking a fee in the (sale or
lease) of the property between ________ (Landlord/Seller) and
Are there sharks and shoals in these seemingly calm waters?
Let's dive in and see.
Is there any harm or potential risk in a broker giving a warranty,
an unconditional promise that no other broker is entitled to a fee?
Of course there is risk! Could Seller or Landlord have promised
a fee to another broker, independent of your own listing
agreement? Could another broker claim – and be entitled to
compensation based on a prior listing, or based on language in
a lease which have been extended or renewed? The fact is, you
just don't know. I have already seen several lawsuits where a
prior listing or a broker's actions, which are prior in time to your