Professional Report - Q3 2013 Fall

Broker Lien States:

31 and Counting

Since 1991, 31 states have created lien rights for brokers working on commercial real estate transac- tions. SIOR and NAR have supported broker lien rights, with published articles, presentations at conferences and legislative support. Recently the SIOR connection led to Delaware’s enactment of the Commercial Real Estate Broker Lien Act, a fitting conclusion to a process that began 20 years ago. In April of 1993, after having been the victim of an ugly commission ‘haircut,’ Pete Davisson, SIOR, CCIM, thought there ought to be some way to protect the brokerage community. After a little homework, he determined that in several states, legislation had been passed which would allow a broker, after completing the sale or lease duties he had been asked to provide, to record a lien on a commercial property, thereby preventing the owner from transferring title without satisfying the commission obligation. Pete then secured the support of the leaders in the Delaware real estate brokerage market and started the process to write and present to the Delaware Legislature a Commercial Lien Bill. The bill floundered for several years (and several drafts) until Pete and Jim Hochman met several years later.

Pete first met Jim Hochman (SIOR
Associate Member) in the 1990’s. Jim was
in-house counsel with CBRE at the time and
a frequent presenter of Education Sessions
at SIOR conferences. Jim authored several
articles in SIOR's Professional Report
that addressed lien rights. Pete attended
Jim’s conference session on broker lien
rights, and came away with the under-
standing that if Delaware brokers' lien
rights were to be enacted, it would only get
done with Jim’s help. Pete set the whole
process in motion again. Unfortunately,
several lien bills were “floated” but never
passed. Pete, however, never accepted the
fact that lien rights were simply not meant
to be in Delaware. The goal was to enact
legislation, but the effort sputtered several
times over the years to be resurrected only
as time and focus allowed.

Years passed. Jim moved on from
CBRE into private practice and SIOR and
NAR continued to support Jim’s efforts
to get lien rights for brokers. Success in
many states (including Florida, Colorado,
Carolina among others) during this nine
year period kept NAR and SIOR focused
on the issue. Jim continued to monitor the
effort in Delaware and regularly encour-
aged “one more try” for Delaware.
In early 2012, Pete assembled the
Delaware commercial brokerage leader-
ship and local counsel from the Delaware
Association of Realtors, the Tri-State Area
Commercial Realtors, the commercial
overlay board, the Commercial Industrial
Realty Council of Delaware (CIRC) and
in a conference call, the Delaware team
finally heard Jim say that with 28 lien
states, perhaps the time was right for the
next lien right initiative in Delaware.

Pete’s group wrote a new bill, Jim added his comments and advice and the Delaware lien right initiative was back on track; but 2012 wasn’t their year. Opponents from the state bar association kept seeking more time to “study” the issue, while they raised more arguments against lien rights for brokers. Pete’s group had chosen their legislative sponsor well though, and Delaware State Representative Bryon Short (a real estate investor and entrepreneur, but not a broker) put an end to the bar’s continued delay on the issue.

Representative Short hosted a meeting in his office in Wilmington, Delaware in December of 2012. Pete brought the Delaware team, NAR brought Jim

James A. Hochman, has represented commercial real estate brokerage firms, landlords, tenants, and investors for 31 years, specializing in all phases of Commercial Real Estate transactions, negotiations and litigation. He is a specialist in broker lien law and license portability legislation, having been instrumental in the drafting and adoption of state statutes across the nation. Mr. Hochman is the real estate partner at Coman Anderson PC, and is also an Associate Member of SIOR. He can be reached at jhochman@comananderson.com, or at (630) 946-1666.