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How do I go about taking a broker to arbitration for charging hidden fees?

Bellflower, CA |

At time of doc signing I was told that I had to write a personal check for $2500 because the lender credited me instead of the broker. I was told this would be fixed on the final HUD. When i closed the HUD did not show anything stating I paid $2500 and it now had a broker fee of $1940 which was NEVER given to me on ANY estimated HUD or anything, not the HUD i signed during doc signing either. The broker is giving the same story that I was credited instead of them. Now i'm being told from a third party that I was given a rebate from the lender (which was never disclosed to me) and that the broker is just trying to keep that $. I know there is a page on the offer that has initials for arbitration, how do I get this started?

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Attorney answers 3


The arbitration clause in your purchase contract is only enforceable against your broker if: (1) it is initialed by buyer and seller, and; (2) the arbitration clause further states that all disputes between buyer/seller and the brokers must be arbitrated. The claimant and respondent (your broker) will have to agree upon an arbitrator, so you are unable to initiate arbitration unilaterally unless the arbitration clause specifies arbitration before a particular arbitration service (e.g., AAA, JAMS, etc.).

If the amount in controversy is only $2,500, you are probably better off filing suit against your broker in small claims court. Initiating an arbitration and hiring an arbitrator will likely cost more than $5,000.

Your broker also undoubtedly maintains a membership with the local realty board. The by-laws of that realty board obligate the broker to arbitrate with his client if that is the forum the client selects. The cost to arbitrate before the realty panel may be comparable with the cost of filing suit in small claims court. The arbitrator or arbitration panel will be neutral. However, the arbitrator or panel will be comprised of other brokers.


Write the broker a very cordial letter asking him/her to spell out his/her position in writing for you. Explain very nicely with no aggressive or threatening language that you are opening a complaint with the California Department of Real Estate licensing and enforcement staff and that you want to fairly and accurately forward the specific facts of his/her position to DRE. Do not ask for anything.

Wait 5 business days then send your complaint to DRE with or without a fair statement of the broker's position, cc to the broker.
If the broker is smart enough to be a broker, s/he is too smart to court a DRE investigation -- and the risk of loss of the broker license, disgorgement orders for the full amount of commission or profit, and fines and penalties in the thousands that cannot be avoided even by BK or by surrender of he license -- over a garden-variety claim of this amount. My firm represents many DRE-licensed brokers and we would escort out the door any broker whose cost-benefit analytic capabilities were so defective.

I predict this will be resolved before you need to open your complaint. But, if not, make it real:

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Review ALL the documents you signed and were given at the time of the closing and at the time that you first retained your realtor / broker. Those documents will set forth the forum in which you have to initiate the demand for arbitration. If you cannot locate the specific form with the Agreement to Arbitrate, simply write a letter to the Broker and ask that he / she agree to arbitrate your dispute. Identify specifically what you think your "claim" is and what you are looking for in the form of your relief (monetary claim). Ask the Broker to agree to binding arbitration and ask that it be submitted to a provider such as the American Arbitration Association or even the Better Business Bureau. The BBB offers mediation / arbitration in many instances - especially if the Broker is a member of that organization.

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