Form 9.8 is the “Notice of Real Estate Compensation.” The form is largely drawn from ORS 696.582, where the legislature has created the template for a written notice of compensation for brokers to give escrow. If the Notice of Compensation is given to escrow more than 10 days before closing, the Broker who provided the Notice of Real Estate Compensation must also delivery a copy to the principal in the notice [the client]. If the Notice of Compensation was given to escrow within 10 days of the closing, escrow will give the client a copy of the notice at closing.
Under ORS 696.582, escrow is supposed to hold a certain amount of money back from a transaction if (1) a written notice of compensation is given [signed by the broker] and (2) the written closing instructions from the principals [clients] do not honor the terms of the notice of compensation. In effect, money is kept back until the parties figure out the conflict or confusion. Sometimes the error is a simple one, like forgetting to add a zero [$1,000 becomes $10,000], other times the commission payment error can be a little more nefarious. This can be particularly important if the parties decide to simply not pay the agent; the sale closes, both Buyer and Seller refuse to pay a commission to the agent, and the client instructions to escrow didn’t show any payment to a broker.
Without a Notice of Real Estate Compensation, the Seller receives the money from escrow and Broker’s recourse is to bring a dispute or lawsuit against the client for the payment; this gets particularly difficult when the Seller has already packed up and moved out of state or out of country.
When a Notice of Real Estate Compensation is used, escrow will note the discrepancies and either get the issue solved before closing. Otherwise, the commission sum in the Notice of Real Estate Compensation will be set aside and held locally until the commission dispute is solved.