Brokers Sue Largest Coldwell Banker Franchise Over Fee ‘Scheme’

Coldwell Banker Seacoast Benefit allegedly pocketed fee charges it instructed its brokers had been going to the franchisor. The brokerage says the allegations are “a whole fabrication.”

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4 North Carolina actual property brokers have filed a lawsuit looking for class-action standing in opposition to Coldwell Banker’s largest franchisee, alleging the brokerage pocketed fee charges it instructed its brokers had been going to the franchisor.

In a Feb. 22 complaint, attorneys for brokers Jeff Domin, Laura LeFevre, Casey Roman, and Jonathan Adcock element an “unfair and misleading scheme” by Wilmington-based Coldwell Banker Seacoast Benefit “to complement itself by surreptitiously retaining hundreds of thousands of {dollars} in actual property commissions which can be contractually owed to its brokers — each present and former.” Seacoast has greater than 800 currently-affiliated brokers.

The grievance alleges that Seacoast’s unbiased contractor agreements say that the brokerage has to take a “6% Coldwell Banker Franchise Payment” from your entire fee the brokerage receives from a transaction, earlier than splitting the remaining fee between the brokerage and the agent. Seacoast allegedly tells its brokers the whole thing of that charge goes to its franchisor, Coldwell Banker.

Nonetheless, the grievance alleges, Coldwell Banker started decreasing its franchise charges for its largest franchisees “[y]ears in the past” to “as little as three p.c” however Seacoast allegedly continued to take 6 p.c, helped itself to the distinction, and instructed the brokers it was all going to the franchisor.

“Seacoast’s failure to remit the complete six p.c Coldwell Banker Franchise Payment to Coldwell Banker resulted in an altered fee break up that violated the events’ Settlement as a result of it materially modified the phrases of the agreed-upon Fee Schedule,” the grievance says.

“By deducting the six p.c Coldwell Banker Franchise Payment after which surreptitiously retaining a portion for itself, Seacoast has brought on substantial financial hurt to Plaintiffs and different equally located actual property brokers …”

Seacoast allegedly hid what it was doing “to discourage any investigation into Seacoast’s fee practices, and to keep away from any renegotiation of the phrases of the Settlement,” the grievance added.

In an emailed assertion, Seacoast’s outdoors counsel, Gary Shipman, managing associate at Shipman & Wright, instructed Inman the lawsuit was meritless.

“We take the allegations on this lawsuit severely, and the notion that any present or former brokers/brokers have been ‘overcharged’ or that Sea Coast has in any means been misleading is a whole fabrication,” Shipman stated.

“Sea Coast takes pleasure in having delivered to each certainly one of their present and former brokers/brokers every thing that Seacoast dedicated to supply, and however the allegations on this lawsuit, Sea Coast’s actions have all the time targeted upon making an attempt to maximise every agent/dealer’s skills to succeed below the Coldwell Banker model, of which Sea Coast is part.

“We remorse that these former brokers/brokers who filed this motion didn’t have the courtesy to confront Sea Coast with any of their allegations both whereas they had been working with Sea Coast or afterwards, because the allegations they and their attorneys have made symbolize a gross misunderstanding of what Sea Coast has charged, offered or tried to supply to them.”

Shipman added that the brokerage has obtained an “overwhelming present of assist” from its group members, who’ve additionally stated the lawsuit is “frivolous.”

“We intend to vigorously defend this lawsuit, as we imagine it to be utterly with out benefit, legally and factually,” Shipman stated.

Shipman famous that “one of many fallacies” of the go well with is that Seacoast pays Coldwell Banker a “franchise charge.”

“Seacoast doesn’t pay a ‘franchise charge’ to Coldwell Banker; they pay a ‘royalty’ and ‘advertising charge,’” Shipman stated. “Brokers are charged a ‘franchise charge’ by Seacoast for the privilege of promoting actual property by Seacoast’s Coldwell Banker franchise, for which they’re offered particular ‘companies’ by the Coldwell Banker Seacoast franchise.”

Requested what the royalty and advertising charge is, whether or not the franchise charge is paid on prime of the agent-broker fee break up, and what companies Seacoast gives in alternate for this charge, Shipman didn’t reply.

The grievance seeks class-action standing on behalf of all brokers and brokers in North Carolina who signed an unbiased contractor settlement with Seacoast and had been paid commissions from which a 6 p.c Coldwell Banker Franchise Payment was deducted, which the plaintiffs estimate quantity within the “a whole bunch, if not 1000’s.”

The grievance seeks a jury trial and alleges breach of contract, violation of the North Carolina Unfair and Misleading Commerce Practices Act, and unjust enrichment.

Learn the grievance:

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