Summary of HB10-1288

Sponsors: Nikkel/Williams

Existing law allows architects, building contractors, auto mechanics, and others to enforce debts through creation of a lien on real or personal property. The bill extends this enforcement mechanism to real estate brokers who procure tenants for commercial real estate, either under a listing agreement or a written compensation agreement. The bill places conditions on the real estate broker's right to the lien, including an obligation to seek mediation of the dispute; to give notice of the intent to pursue enforcement of the debt through the lien process, both before and after recording the notice of lien; and to commence a lawsuit within 6 months if the debt is not paid.

CAR Talking Points:

Background:
Currently brokers are either not being paid their commissions or are having to wait months to receive them. Since brokers do not have the ability to lien properties, there is no incentive for property owners to pay earned broker commissions promptly. 25 other states permit some type of real estate brokers’ liens.

Summary:

• Only applies to commercial property.
• Only applies to leasing transactions, not sales.
• Only applies to transactions where there is a written agreement between the broker and property owner or owner’s agent.
• Provides the property owner with the incentive to resolve an unpaid earned commission to a broker that the owner agreed to pay a commission before a lien is filed on their property.
• Provides for notice of intent and mediation:
  • A broker must file a notice of intent to lien at least 30 days before they record a lien.
  • The bill allows 30 days for mediation and negotiation prior to the recording of the lien where the broker is on equal footing with the owner.
• Provides recourse to property owners if they believe a lien was not filed in good faith.
• Provides the property owner the ability to bond over the lien, thereby discharging the lien and clearing the property’s title.
• Provides for the release of liens that have been satisfied or if the broker fails to enforce the lien within the time provided.
• Subordinates the lien for valid prior recorded liens, mortgages or encumbrances; the brokers’ lien attaches only when the lien is recorded and does not relate back to the date of the written agreement.

Bottom Line:
Real Estate brokers create an increase in value for property owners; a property without a lease has little value. Brokers, who often work for months and even years on a deal to earn a commission, deserve a mechanism that protects them. Brokers who have not been paid their commissions or have not had their written agreements honored properly need recourse for receiving their earned commissions. Property owners who pay earned
commissions owed on time will NEVER have to worry about a lien being filed on their property.

Status:

02/05/2010 Introduced In House - Assigned to Judiciary
03/01/2010 House Committee on Judiciary Refer Amended to House Committee of the Whole
03/05/2010 House Second Reading Laid Over Daily
03/08/2010 House Second Reading Passed with Amendments
03/09/2010 House Third Reading Passed
03/11/2010 Introduced In Senate - Assigned to Judiciary
03/17/2010 Senate Committee on Judiciary Refer Amended to Senate Committee of the Whole
03/19/2010 Senate Second Reading Special Order - Passed with Amendments
03/22/2010 Senate Third Reading Laid Over Daily
03/25/2010 Senate Third Reading Passed with Amendments
03/29/2010 House Considered Senate Amendments - Result was to Laid Over Daily
03/31/2010 House Considered Senate Amendments - Result was to Laid Over Daily
04/05/2010 House Considered Senate Amendments - Result was to Concur - Repass
04/16/2010 Signed by the Speaker of the House
04/19/2010 Signed by the President of the Senate
04/19/2010 Sent to the Governor
04/29/2010 Governor Action - Signed

Fiscal Notes

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