The Florida Office of Financial Regulation (OFR) confirmed licensees’ right to conduct short sales when compensation involves commission only. The Florida Association of Realtors® (FAR) requested an interpretation of section 494.00296 Florida Statutes, created by the Florida Legislature to protect homeowners from less-than-honest vendors offering help with a short sale, and OFR issued its informal interpretation in a letter.
FAR requested a similar interpretation from Florida Attorney General Bill McCollum in November 2008. OFR Chief Counsel Gregg Morton referred to McCollum’s original opinion, and generally agreed with the Attorney General’s interpretation.
The non-binding opinion is based on the following situation:
“A real estate licensee is asked by a client to list a house for sale. The licensee ascertains the fair market value of the house is less than the amount owed on the mortgage and lists it for that fair market amount. If a buyer is obtained who is willing to pay a price less that the amount owed, the real estate licensee would then enter into a dialogue with the lender to see if a short sale would be acceptable, thereby avoiding a possible foreclosure situation. The only remuneration sought by the licensee is the commission on the sale. No additional fee is sought by the real estate licensee for the negotiation or dialogue with the lender.”
OFR included the following specific assumptions in its answer:
• No upfront or other fees for the negotiating service.
• A real estate licensee’s commission must be “the standard commission for the area.”
• The commission cannot be set higher or be split more favorably with another real estate licensee based on the additional work involved.
• The OFR opinion is limited to the facts set out above.
Under those conditions, OFR agreed that a licensee’s negotiation with the lender is “ancillary to services provided by a real estate licensee in the sale of his or her client’s property.” Given that, it does not appear to break the law.
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