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Agents Sue Largest Coldwell Banker Franchise Over Commission ‘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 “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 instructed 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 complement itself by surreptitiously retaining thousands and 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 unbiased 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 price goes to its franchisor, Coldwell Banker.

Nonetheless, the criticism alleges, Coldwell Banker started reducing 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 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 prompted 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 criticism 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 manner been misleading is an entire fabrication,” Shipman stated.

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

“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 help” from its staff members, who’ve additionally stated the lawsuit is “frivolous.”

“We intend to vigorously defend this lawsuit, as we consider it to be fully 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 price.”

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

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

The criticism 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 Charge was deducted, which the plaintiffs estimate quantity within the “a whole lot, 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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