Condo “Marketing Fee” Forces Unit Owners to Use Condo’s Designated Realtor

S.Y. from outside of Connecticut writes:

Dear Mister Condo,

Our condo board discriminates against unit owners who want to list their unit for sale outside the condo realtor. If you list with the condo’s realtor, the realtors commission of 6% is paid from the condo’s 10% “marketing fee” levied when a unit sells. If you use your own realtor, you pay the 10% condo “marketing fee” plus 6% to the realtor.

Many of us want to use our own realtors because the condo’s realtor shows preference to Board members and their friends. If you’ve ever been in a disagreement with the Board, look out, your unit will never sell.

We have considered legal action but this will damage sales prospects for our units.

 

Mister Condo replies:

S.Y., damaged sales prospects aside, I don’t see any other way to remove this obstacle to using a realtor other than the “selected” condo realtor. That being said, I am not sure there is a true legal issue here. The 10% “marketing fee” is a condition for anyone who sells. While I think that 10% is an exorbitant amount to pay for “marketing fees”, from what you have told me it is a rule that has always been in place. Perhaps the Declarant wanted to monopolize all initial sales and resales so the clause was added? Whatever the reason, the 10% is currently the law of the land for your association. How do you and your fellow unit owners feel about this? If there is enough dissent, why not simply vote to have the rule removed? The fee paid by a seller to a realtor is typically negotiated by the seller. Here, the association has already negotiated a permanent seller’s fee of 6% to the realtor, which the association is essentially rebating back to the seller because it is coming out of a 10% “marketing fee” the seller agreed to abide by when he or she originally purchased in to your association. While I will agree that it is a bit questionable, I am not certain it is anything that can be undone by bringing a suit against the association. You have the power to correct the situation by simply eliminating the “marketing fee” or making it 4% (10% – 6%). Either method would leave the unit owner free to select their own selling agent at whatever fee they negotiated. 6% is common but I know of many markets across the country where listing fees are far less. Many times, the real estate market dictates what is a reasonable fee versus a “set in stone” flat rate. Good luck!

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