In an action designed to enhance market efficiency, CIBS - the Commercial Industrial Brokers Society of Long Island - has added commission and fee transparency to its code of conduct, effectively making listing brokers responsible for disclosing commissions and payment terms to co-brokers.
Disputes over co-brokered agreements are a perennial cause of friction between practitioners, and add to the overall cost of doing business in the market.
As updated before the group’s board meeting earlier this month, the code requires the listing broker to document commission details in writing when asked by a cooperating broker, responding “in a timely fashion.” Details would include the commission rate or special fee arrangement; whether rates are determined on gross or net rental; the timing of payments; possible offsets; and other pertinent information that might affect payment. Previously, listing brokers would attempt to negotiate payment terms after a deal was underway, rather than before.
Responsibility for requesting the terms belongs to the cooperating broker.
Complaints by members would be brought to the association’s ethics board, comprised of industry veterans and firm partners. CIBS president David Pennetta said the rule was added in response to calls from members for greater transparency. Disputes over commissions and fees add to the cost of doing business, he said, and unnecessarily deter cooperation.
“Ethical behavior is a key characteristic of a trusted professional advisor, and it is very much the profile of the CIBS broker,” said Mr. Pennetta, who is a principal at Oxford & Simpson Realty, Inc. in Jericho, NY. “By insisting on the highest standards of professionalism for our profession, we raise the bar for the industry overall.”
CIBS is the largest membership organization serving the commercial real estate industry on Long Island, a market of over 250 million square feet of office and industrial space. CIBS celebrates its 20th anniversary throughout 2012.