Home Selling in 10023>Question Details

Jon Edwards, Home Seller in New York, NY

In NY can the seller's attorney also get a percentage of the sell price without disclosing that info to the

Asked by Jon Edwards, New York, NY Tue Sep 9, 2008

I own a home in NYC and am selling the property. I have an attorney, however, I am not sure if my attorney can collect his fees based on a percentage of the sell price, or if it has to be disclosed to the buyer.

Let me know.

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12
Hi Jon. I know this is an old question but I was intrigued to read the responses and feel compelled to respond! I've not heard about what you refer to here. Attorneys usually have a set fee for real estate transactions. This fee can vary but I've never come across a percentage type of fee.

The sellers signed for exclusive representation and right to sell with their broker. All brokers in NYC offer to co-broke their exclusive listings with other agents/brokers. These agents/brokers bring in a ready, willing and able buyer and get paid a percentage of the total commission. This is standard for broker to broker transactions. No where in that arrangement have I ever seen a provision for an Attorney to get a percentage of the fee. Who would pay that fee? There's something hinkey going on here.

The short answer is, get another Attorney and I hope you did. Good luck.
0 votes Thank Flag Link Sun Dec 12, 2010
Jon,

Look if your attorney is trying to collect a fee on the selling price, hire someone else. Unless this attorney was with you every step of the way, helping you negotiate the deal, providing you comps for apartments, etc.... I'm not really sure how he came up with this in the first place. Attorney's get their legal feel paid, anywhere from $800 to maybe $2000 depends on how good he or she is and that's it. Why in the world would you want to share a % of your sales price with an attorney, did they do something extra for you and help you earn $50 or $100K over your asking price that they feel entitled to this? I highly doubt it.
Sounds very shady to me. And just because an attorney holds a brokers license doesn't mean he knows much about the market or what how much is selling for.
0 votes Thank Flag Link Fri Sep 26, 2008
This is a really interesting question, Jon.

As I understand it, lawyers in NY have the ability to act as brokers (just thinking out loud).

As such, it would seem that the disclosure would be required. EXCEPT in NYC four-or-more units.

I would assume of the lawyer automatic fiduciary (as opposed to a lesser obligation, should agency change during the transaction for a real estate person) to their client. I would think, if the laws were in tune, that there would be a requirement for disclosure to a buyer (or whichever party is on the other side of the transaction).

NY agents don't represent the seller only (as indicated below, then corrected) so were I operating as a buyers agent, I would want all associated fees that are IN THE PRICE OF THE HOME disclosed to a buyer of mine, lawyer listor notwithstanding.

While it's certainly true that the seller writes the check, a buyer may well have a mortgage that includes the fees. His dime (s). I don't care what the seller does if the buyer isn't paying for it in some way.

What a buyer pays a lawyer is immaterial to the seller- it doesn't cost him/her a dime.

I don't like non disclosure if the "fee" is included in the asking price of the home for sellers OR buyers- for sellers, why it is what it is, and what goes to whom; buyers, what fee is included in this purchase for which you'll be obtaining a mortgage, or spending savings.

It seems absurd to add: NOT LEGAL ADVICE- I AM NOT A LAWYER- this should be clear to any reader- but there it is.
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Mon Sep 15, 2008
It sounds legal, but borderline unethical. Like Daniel Gershberg, Atty said- the amount of work and effort is identical. Why should the fee be based on the sales price?

With that said, the amount or work to sell a 2M property or a 200K property is the same or easier in many cases! Perhaps realty agents should be paid a flat fee for services?

Actually, locating a rental and completing the lease and addenda is more involved than a purchase and sale agreement!
0 votes Thank Flag Link Mon Sep 15, 2008
Mr. Fine is right on the money
0 votes Thank Flag Link Mon Sep 15, 2008
One answerer to your question wrote that all agents in NY, by law, represent the sellers. This is not correct. The agent can be a Buyers Agent working for the Buyer, or a Brokers Agent working also for the Buyers agent. And, of course, there are the listing agents working for the seller and the brokers agents working for the listing agent.
The NY law does require all agents to explain this to their customers and clients and have them sign a NYS disclosure form.
0 votes Thank Flag Link Fri Sep 12, 2008
I'm not really sure about the legalities of this but I do know that New York Attorneys usually hold a real estate license and if they work for the seller and the seller agrees to pay them a fee then why not?
0 votes Thank Flag Link Thu Sep 11, 2008
I have been to many a closing in Manhattan working at Corcoran for 3 years and at my own closing in Hells Kitchen recently. Pretty much everyone that gets paid does so at the closing table and the bank has a check list and both the buyer and seller sign their lives away for each and every check issued. I have never seen anyone get paid without lots of documentation, with or without a bank involved. I guess you could try to get a seller to pay you on faith after the deal is closed - good luck with that!

By default, attorneys in the state of New York have the right to act as an agent and receive commission. Therefore, an attorney you can legally represent a seller or buyer (by law all agents represent the seller by the way) and receive a commission. So the real question is can you justify a fee and/or commission above and beyond your attorney's fees to your client? You can do that lots of ways: 1. By doing all the work to help them find and purchase the apartment including showings, appointments, offers, negotiation, coop or condo board packages, etc. 2. By offering a discounted commission that will somehow save the seller money (100% of the commission comes from the seller/purchase in NYC) 3. Just do your run of the mill attorney duties but do a good job of selling yourself as deserving of more than just you run of the mill attorney's fees!

Best bet is #1! I hope that helps!
0 votes Thank Flag Link Wed Sep 10, 2008
Also a correction to my last answer. Your attorneys fee DOES NOT have to be disclosed to the buyer. Only realistic way they would find out is if it was for some reason listed on the HUD-1
0 votes Thank Flag Link Tue Sep 9, 2008
I am a Real Estate attorney and I have heard of it being done. However, and this is simply my opinion, a two million dollar contract is the same as a two hundred thousand dollar contract on our end. We still have to do the same changes to the same contract and have the same responsibilities with title, and we have to show up at the closing. Ive done representation for buyers and sellers for co-ops that have gone for 200k and houses which have exceeded 2 million and I can tell you that the work involved is identical. We often times like to charge more because it almost seems justified because of the sales price. My own two cents, and its not at all indicative of any attorney's mind set is that an attorney may think that since the place is going for a high figure, whats a thousand bucks here and there. Again though, the amount of work is basically identical so keep that in mind.
As for the fee-that should be laid out without any confusion whatsoever on the retainer you sign. When you tell him/her that you need representation on a closing, they should just quote you a fee...no confusion
0 votes Thank Flag Link Tue Sep 9, 2008
What/how an attorney charges for legal services falls within the ethics and code of conduct rules of each state. Have you talked to the attorney about the % or about a flat rate? Also, the attorney would be able to tell you if there were any laws that required the disclosure of the fee. (I can't imagine there would be as the buyer is paying a set price for the property and it shouldn't matter to them what you do with the money) The attorney would have to disclose to the buyers that he represented you and not them when he/she prepares the agreement and paperwork for the sale.
0 votes Thank Flag Link Tue Sep 9, 2008
Correction its 2 coops instead of a home and upper west side
0 votes Thank Flag Link Tue Sep 9, 2008
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