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Agents Sue Largest Coldwell Banker Franchise Over Commission ‘Scheme’

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

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

In a Feb. 22 criticism, 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 counterpoint itself by surreptitiously retaining hundreds of thousands of {dollars} in actual property commissions which might be contractually owed to its brokers — each present and former.” Seacoast has greater than 800 currently-affiliated brokers.

The criticism alleges that Seacoast’s impartial contractor agreements say that the brokerage has to take a “6% Coldwell Banker Franchise Charge” from the complete 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 criticism 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 advised the brokers it was all going to the franchisor.

“Seacoast’s failure to remit the complete six p.c Coldwell Banker Franchise Charge 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 criticism says.

“By deducting the six p.c Coldwell Banker Franchise Charge after which surreptitiously retaining a portion for itself, Seacoast has induced 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 cost practices, and to keep away from any renegotiation of the phrases of the Settlement,” the criticism added.

In an emailed assertion, Seacoast’s exterior counsel, Gary Shipman, managing associate at Shipman & Wright, advised 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 method been misleading is an entire fabrication,” Shipman mentioned.

“Sea Coast takes pleasure in having delivered to each one among their present and former brokers/brokers every part that Seacoast dedicated to supply, and however the allegations on this lawsuit, Sea Coast’s actions have all the time centered upon attempting to maximise every agent/dealer’s talents 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 characterize 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 help” from its group members, who’ve additionally mentioned the lawsuit is “frivolous.”

“We intend to vigorously defend this lawsuit, as we consider it to be fully with out advantage, legally and factually,” Shipman mentioned.

Shipman famous that “one of many fallacies” of the swimsuit 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 and marketing charge,’” Shipman mentioned. “Brokers are charged a ‘franchise charge’ by Seacoast for the privilege of promoting actual property via Seacoast’s Coldwell Banker franchise, for which they’re offered particular ‘companies’ by the Coldwell Banker Seacoast franchise.”

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

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

The criticism 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 criticism:

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Electronic mail Andrea V. Brambila.

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