How Can I Resolve a Dispute Over Commission Paid to a Broker?

Posted: December 18, 2013  |  By: David Weil, Esq.

I am trying to help my parents with a problem that developed in connection with the recent sale of their boat. The boat was listed with a broker in Southern California, and after the deal closed, he had apparently deducted a 30 percent commission from the sale proceeds instead of the usual 10 percent. I know I could take the broker to small claims court, but I am trying to avoid that, since I live in another state. I am instead looking for a trade organization or association that I may be able to file a complaint with. I have heard that all brokers are part of an association that allows them to post their listings on the Yachtworld website, but I have not been able to find that organization on the Internet. If you could point me in the right direction, I would really appreciate it.
Our reader is unfortunately operating under a number of misconceptions.            

First, he indicated that this was not his boat, but that he is instead helping his parents with their commission dispute. That’s very considerate of him, but a person may not represent another person or entity in a legal proceeding unless he or she is a licensed attorney.            

He may be able to get around this if his parents assign their claim to him, but he would probably need to hire an attorney for that procedure -- and it appears that this is a relatively small claim, so it may be hard to justify the cost of hiring an attorney. At this point, that is not a problem, since he appears to be looking for something less formal than a lawsuit or arbitration.            

He is also a little confused about the relationship between Yachtworld and the yachting industry trade organizations. None of the various trade organizations for yacht brokers around the country are affiliated with Yachtworld, a boat sales website. Advertisers on the website must be affiliated with a legitimate yacht brokerage company, but they do not need to be a member of a trade association.            

Furthermore, his parents’ yacht broker may or may not be a member of one of the trade organizations. In California, many brokers and salespeople are members of the California Yacht Brokers Association (CYBA), but membership is by no means universal.
             
Even if this broker is a member, the CYBA has no facility for filing complaints against a member. They do have a procedure for resolving disputes through a binding arbitration program, but this may not work for our reader, since he is trying to represent his parents and he is trying to avoid a trip to Southern California.            

He may want to consider filing a complaint through the California Division of Boating and Waterways, at dbw.parks.ca.gov/YnS/, the California state agency that regulates yacht brokers. California is one of only two states in the country that regulate and license yacht brokers (the other state is Florida), and one of the missions of the DBW is to protect the yachting public in purchase and sale transactions. A complaint against a yacht broker may lead to a fine or other discipline against the broker’s license, but unfortunately it will not lead to an enforceable judgment against the broker and in favor of our reader or his parents.            

So, in light of these obstacles, our reader and his parents will probably need to pursue the broker through arbitration or small claims court, which will require his parents to take an active role in the process.            

Before they take those steps, however, they should take another look at the listing agreement that they executed with the broker. It is true that the industry standard for yacht sales under $1 million calls for the seller to pay a 10 percent commission -- but that amount is not established by law, and it may be negotiated up or down.            

And, for boats that sell on the lower end of the price scale, most brokerage listing agreements also provide for a minimum commission amount. The listing may include language that calls for the broker’s commission to be calculated along the lines of “10 percent of the selling price or $3,000, whichever is greater.” If the boat sold for a relatively small amount, the minimum commission will effectively increase the commission percentage.            

Dispute resolution is often more complicated than it may appear on first impression, even for a relatively small dispute, such as the scenario described in this case. A consultation with an attorney may save time and money in the long run.

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