Commission Advances

Posted on: August 7th, 2019 by Andrew Clark No Comments

From the Ohio Division of Real Estate:

It’s been brought to our attention that companies are sending solicitations to Ohio licensees containing offers to advance commissions. The offered commission advance is based upon certain requirements, including that the licensee sign an agreement that the licensee will assign the licensee’s portion of the commission to the company advancing the commission.

These types of agreements violate Ohio license law. Specifically, O.R.C. 4735.21 states “a salesperson licensed under this chapter shall not sell, assign, or otherwise transfer the salesperson’s interest in a commission or any portion thereof to an unlicensed person or entity. If a salesperson makes such assignment or transfer, the broker shall not pay the transferee or assignee any portion of the commission.” Further, O.R.C. 4735.20 (F) states “No broker shall pay a fee, commission, or other compensation that is due to an affiliated licensee to a third-party creditor of the affiliated licensee.”

As such, Ohio law prohibits a salesperson from selling, assigning or transferring the salesperson’s interest in a commission to an unlicensed person or entity. Even if the salesperson does so, the broker is prohibited from paying any portion of the commission to the transferee/third party creditor of the salesperson.

If you receive such a solicitation, please forward a copy to the Division at Webreal@com.state.oh.us. Or if you have questions, please feel free to call 614-466-4100 to speak to one of the Enforcement or Legal staff.