AB 873

Currently, a real estate broker may obtain a lien against commercial real estate

for the unpaid amount of the commission earned under a written commercial real

estate listing contract, tenant representation agreement, or buyer agency agreement

or for unpaid compensation earned under an agreement to lease or manage

commercial real estate if the real estate broker complies with certain notice

requirements and perfects the lien by filing the notice of the lien in the office of the

register of deeds. The current definition of commercial real estate excludes real

property containing eight or fewer dwelling units. The bill changes that definition

to exclude real property that consists only of dwelling units used solely for residential

purposes and that contains eight or fewer dwelling units.

Under current law, the real estate broker is required to file a written notice of

intent to claim the lien with the register of deeds at least 30 days before the

conveyance of the commercial real estate that is the subject of the listing contract or

the buyer agency agreement or before the date on which the written lease or

management agreement is entered. The lien is then perfected when the broker files

the notice of lien with the register of deeds, which must be done three days before the

date of the recording of the conveyance documents for the commercial real estate that

is the subject of the listing contract or the buyer agency agreement, or 90 days after

the broker earns the commission or compensation under the agreement.

Under this bill, the requirement that the real estate broker file a notice of intent

to claim the lien with the register of deeds is removed and replaced with a

requirement that the real estate broker give written notification to the person owing

the commission or compensation of the broker's authority to claim a lien if the

commission or compensation is not paid. In addition, the bill requires that

commercial real estate listing contracts, buyer agency agreements, tenant

representation agreements, and agreements to lease or manage commercial real

estate include a notice of the real estate broker's authority to claim a lien, and

provides a form for the notice.

Currently, if there is a dispute regarding the amount of commission or

compensation owed to a real estate broker, a recorded lien may be satisfied by the

broker if the person owing the disputed amount pays 125 percent of the disputed

amount into the trust account of the real estate broker or an attorney who does not

represent any party to the dispute pending a written agreement by the parties or a

court order. This bill also allows the payment to be made into the trust account of

a mutually agreed-upon third party.

Under current law, the real estate broker's satisfaction of a lien must be filed

with the register of deeds and the register of deeds is required to index the

satisfaction under the name of the owner of the real estate and, if the register of deeds

maintains a tract index, under the legal description of the real estate. The bill

requires a satisfaction of a real estate broker's lien to be recorded with the register