As you may know, effective October 1, 2022, Maryland law changed and settlement companies such as Village Settlements are now allowed to issue a check directly to an associate real estate broker, a real estate sales person or a business entity such as an LLC or professional service corporation in accordance with a WRITTEN DISBURSEMENT AUTHORIZATION PROVIDED BY THE BROKER.
The Maryland Insurance Administration issued Bulletin 22-12 on September 13, 2022 indicating that each disbursement, such as the check to the Broker, the check to the individual agent and any other check that comes out of the Broker’s Fee must be itemized on the Closing Disclosure and the ALTA statement. Therefore, it is very important that agents understand that their share of the Broker’s Fee will be separately listed on the Closing Disclosure and the ALTA.
For example, if the Broker’s Fee is $10,000 and ABC Broker is to receive $1000 and individual salesperson Jane Smith is to receive $9,000, then those two itemized disbursements must appear on the Closing Disclosure and the ALTA. The failure to properly disclose this information on the Closing Disclosure or the ALTA statement could subject the settlement company to severe penalties including the loss of their license.
Nothing in this new law or the regulations requires the Broker’s Fee to be split at settlement. We are still allowed to issue a single Broker’s Fee check or wire as we have always done. However, if a Broker would like to have their fee check broken out into multiple disbursements, the Broker should provide the settlement company with written instructions well in advance of settlement so that the various payments can be included on the Closing Disclosure and the ALTA statement. At Village Settlements, as always, wire instructions cannot be sent via e-mail, so the Brokers and individual agents should be prepared to deliver their wire instructions to our office at or prior to settlement.
WRITTEN DISBURSEMENT AUTHORIZATION MUST BE PROVIDED BY THE BROKER IF ALL OR PART OF THE BROKER’S FEE CHECK IS TO BE GIVEN DIRECTLY TO THE AGENT AT SETTLEMENT.