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What is a commercial broker lien?

by | Jul 29, 2016 | Commercial Real Estate

Commercial broker liens help real estate agents or brokers ensure that they can recover any commissions following the sale of a property. In most cases, when such a law is present, commercial brokers can put a lien on the property that is not satisfied until commissions are paid in full.

Obviously, a lien on a commercial property is a big deal. Liens can dramatically limit what you can do with a property, particularly if you intended to sell it. They can also get in the way when you want to develop a property as you might need to show a clear title to the property is present.

Broker lien laws are handled on a state-by-state basis, adding to the legal issues you might face as a commercial developer or real estate investor. If you deal in properties in multiple states, you could deal with multiple versions of lien law. In some cases, there isn’t a broker lien law at all.

Brokers also aren’t the only ones who can put a lien against a property. Mechanic’s liens allow contractors or other providers to put liens against some properties if they performed work on the property for which they were never paid.

Two types of legal issues might arise out of this type of lien structure. You may find yourself with a property that has a lien on it and you don’t agree with the lien in question. Perhaps you don’t believe that the total commission or contractor charges were correct. In other cases, you might end up with a property with an old lien against it from a previous owner. Title and lien research can help reduce such risks. Whether your are buying new commercial property or dealing with an existing lien, working with a real estate lawyer can help you understand your rights and what options you have for moving forward.

Source: Realtor.rog, “Field Guide to Commercial Broker Lien Laws,” accessed July 29, 2016