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Brokerage Agreements Involving Commercial Real Estate – Escrow Agent Duties

Updated: Jan 11

In 1999, the Nevada legislature enacted Senate Bill 452, the purpose of which was to prevent real estate brokers in commercial real estate sales transactions from being taken advantage of by commercial sellers who had a tendency to shortchange their brokers on sales commissions at the close of escrow.

Brokerage Agreements Involving Commercial Real Estate – Escrow Agent Duties

The legislation added several new sections to Chapter 645 of the Nevada Revised Statutes, which governs and regulates real estate brokers and agents.

In addition to the new protections and obligations imposed on real estate brokers and sellers in commercial real estate transactions, the new statutes added duties and obligations to the escrow agents involved in the sale as well.

What additional duties and obligations are imposed on Las Vegas escrow agents concerning commercial real estate transactions?

As noted elsewhere, when a real estate broker wants to assert a claim for commission under NRS 645.8765, the broker does so by submitting a written notice of the claim to both the commercial seller and the escrow agent overseeing escrow for the transaction.

Once the escrow agent receives notice of the claim, NRS 645.8781 requires the escrow agent to set aside part of the money being held, in an amount equal to the amount claimed by the broker, or all of the money if the amount currently being held is insufficient to satisfy the claim.

As the statute notes, the escrow agent may take into account any encumbrance, claim or lien that takes priority over the broker’s claim (provided it was asserted prior to the broker’s assertion of his or her claim) in order to determine whether the escrow funds are insufficient to satisfy the broker’s claim.

If the escrow agent determines that the escrow funds are insufficient, they must notify the broker in writing within 3 days of making such a determination (but no later than the close of escrow) of the insufficiency of funds. In addition, they cannot release any funds to the seller unless the escrow agent receives a written agreement from both seller and broker authorizing the agent to do so.

 In the absence of any such agreement, wherein the seller disputes the claim and files a complaint with the court, the funds being held pursuant to the broker’s claim cannot be released until the court makes a determination of the rights of the seller and broker.

However, NRS 645.8781 does note that the seller is still obligated to close escrow for the commercial real estate, even if the funds are being set aside pursuant to the broker’s claim.

Other options are available to the escrow agent

If the broker’s claim has been recorded and escrow for the transaction has closed, the escrow agent has one other option. The agent may deposit the reserved funds with the district court of the county in which the claim was recorded.

Note that the statute does not require the escrow agent to wait for the seller to file a complaint first, just that the claim be recorded, the funds set aside, and the escrow be closed.

Once the funds are deposited with the district court, the escrow agent is fully discharged of all liability related to the funds.

To learn more, visit Las Vegas Real Estate Attorneys or call 800-233-8521 for a free phone consultation.


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