Fees in the Farm & Ranch Contract

May 01, 2025

The Farm and Ranch Contract has two sections on Page 10 related to fees: a Ratification of Fee and an Agreement for Payment of Brokers’ Fees.

A listing broker who has already agreed to pay a commission to a cooperating broker—in the Compensation Agreement Between Brokers (TXR 2402), for example—should fill out the Ratification of Fee box. This authorizes the escrow agent to pay the cooperating broker from the listing broker’s fee at closing.

The seller and buyer should not sign the Agreement for Payment of Brokers’ Fees if the listing broker has already agreed to pay the cooperating broker’s commission elsewhere, like in the Compensation Agreement Between Brokers. This could bind the seller or buyer to unintentionally pay additional amounts to the listing broker or the cooperating broker.

However, a seller and buyer could sign the Agreement for Payment of Brokers’ Fees if the listing broker hasn’t offered to pay a commission. Note that the agreement states either the seller or the buyer will pay the brokers.

Alternatively, if the seller wants to pay for buyer’s brokerage fees agreed upon in a buyer representation agreement, such as the Residential Buyer/Tenant Representation Agreement (TXR 1501-long form/TXR 1507-short form), the seller may include the amount to be paid in Paragraph 12A(1)(b) of the contract and does not have to sign the Agreement for Payment of Brokers’ Fees, because the seller’s signature on the Farm and Ranch Contract binds the seller to pay such fees.

Note: The Texas Real Estate Commission made changes to several sales contracts in November 2024, including the Farm and Ranch Contract (TXR 1701, TREC 25-16), to address the practice changes required by the NAR settlement. Accordingly, Texas REALTORS® has updated this previously published article to reflect how the Farm and Ranch Contract can be used after updates to Paragraph 12 of the contract.

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