TXR 2401 — Compensation Agreement Between Broker and Owner

Form title and copyright notice restricting use to Texas REALTORS members.

Identifies the property owner and the broker who are entering into this compensation agreement, including full contact information for both parties.

Identifies the specific property that is the subject of this compensation agreement, including address, county, and legal description.

Documents the owner's current asking price for sale and/or lease. These figures serve as the basis for computing broker fees in case of an exchange or breach.

Identifies the specific prospect (buyer or tenant) that the broker is registering with the owner. This is the core of the agreement — it ties the compensation obligation to a particular named individual or entity.

Establishes the time period during which the agreement is effective. The agreement ends precisely at 11:59 PM on the specified end date.

Defines the key concepts of when broker fees are 'Earned' versus 'Payable.' Fees are earned upon a binding agreement or owner breach. Fees are payable at specified times detailed in the subsections.

Establishes the broker's fee for a sale transaction. The fee can be a percentage of the sales price or a flat/other amount. The fee becomes payable at closing, upon owner breach of this agreement, or upon owner breach of the sale contract — whichever comes first.

Establishes the broker's fee for the primary lease transaction. Three fee calculation methods are available (percentage of one month's rent, percentage of all rents, or other). Three payment schedules are also offered (lump sum, two installments, or custom).

Establishes the broker's fee for lease renewals, extensions, or expansions. This provision SURVIVES termination of the agreement — if the prospect leases during the term and later renews (even after the agreement expires), the broker is entitled to a renewal fee.

Provides broker compensation if a lease prospect subsequently purchases the property. This protection extends to purchases during the lease term OR within 180 days after the lease ends. This provision survives termination of the agreement.

Establishes the broker's representation role and discloses the IABS form. The broker must select one of three representation modes: represent the owner only, represent the prospect only, or act as an intermediary. If intermediary is selected, detailed rules about confidentiality and disclosure apply.

Lists all addenda and documents incorporated into the agreement. The IABS form is always included by default; additional documents can be listed.

Standard integration/merger clause establishing that this document is the complete agreement and supersedes all prior agreements on the same subject.

Establishes the notice requirements: must be in writing, effective when sent (not when received) to the contact information in Paragraph 1.

Provides an extremely broad definition of 'Sell' that covers virtually any method of transferring a property interest, including oral agreements, options, exchanges, and entity-level transfers designed to circumvent the compensation agreement.

Governs how broker fees are paid. Fees are payable in cash in the property's county. The owner pre-authorizes escrow/closing agents to disburse fees to the broker. Confirms that lease renewal (6B(2)) and subsequent sale to tenant (6B(3)) provisions survive termination. In case of exchange or breach, the asking price from Paragraph 3 is used to calculate fees.

Anti-circumvention provision that extends the broker's compensation rights to transactions involving related parties of the named prospect. Prevents the owner and prospect from avoiding the fee by having a related party (family member, business entity, assignee, etc.) complete the transaction instead.

Three required disclosures: (1) Broker fees are negotiable and not set by any association or MLS. (2) Lead-based paint disclosure requirements for pre-1978 homes. (3) The broker cannot provide legal advice and parties should consult an attorney.

Signature block for the broker (or broker's associate) and owner(s). Includes fields for printed names, license numbers, signatures, and dates. Allows for up to two owners and identifies whether the signer is the broker or a broker's associate.