For some agents jumping ship, the brokerage claws are coming out.
A former Brown Harris Stevens agent is suing the firm over its attempts to clawback more than $400,000 it claims he owes after his departure earlier this year.
The lawsuit isn’t the first time a broker has gone to bat with his brokerage following an exit, and it’s a move that could become increasingly common as many firms are grappling with financial challenges after years of high mortgage rates and increased consolidation.
Clawbacks became the norm in the industry after Compass came on the scene and began luring agents with eye-popping sign-on bonuses and sweetheart deals, a dream scenario for a lot of brokers looking for a fresh start. But those offers came with strings, and many agents soon found themselves locked into their contracts.
To compete, other brokerages had to start buying out the agents they wanted to recruit. That proved an expensive endeavor, and to keep up, those firms instituted clawbacks of their own.
When the residential market hit a fever pitch during the pandemic, the rampant clawbacks weren’t an untenable situation. Many agents were staying put, content to ride the highs, and those who wanted to leave, could count on brokerages to lend them a helping hand.
Then the market turned. Brokers who were no longer making money looked to find hope in a new home, and brokerages in need of top-producers had to stomach the price tags that came with them.
Now some of them are duking it out in court.
According to the lawsuit, Scott Harris ended his 20-year tenure with BHS in January to launch his own company, leaving 12 deals on the table that should have resulted in roughly $290,000 in commissions once they closed.
After the sales hit the books, Harris claims he called on the firm to collect. Instead of issuing a check, BHS responded with a demand that he pay it back for perks awarded to him while on the job and stated that it would be keeping the outstanding commissions as part of that payment, according to the terms of its clawback policies.
Harris claims those policies shouldn’t apply to him. For one, he alleges the company hadn’t delivered on several of its promises, including arranging a private office for his team and paying him the full amount of the bonus he earned for his sales in 2024.
Second, he argues those investments the company made in his business had already fully vested — the time period in which the firm could have clawed back those perks had already ended.
Harris’ arguments echo a similar lawsuit from one of his former colleagues, Chris Poore, who sued BHS after he left for trying to enforce a clawback policy he claimed he wasn’t even aware of.
A judge sided with Poore, awarding him summary judgment on two of his claims. His attorney at the time said the decision could serve as a bellwether for how judges might view some of these cases.
That’s Amor
Best-selling author Amor Towles closed the book on his Noho condo.
The novelist behind “A Gentleman in Moscow” and “Rules of Civility” sold his 1,600-square-foot apartment at 1 Bleecker Street for $2.6 million, according to public records. The condo has two bedrooms and two bathrooms and features exposed brick walls and a clawfoot bathtub.
Towles purchased Unit 3A/3B in the 1990s when it was just a “gutted loft,” according to the New York Times. The author met his wife, Margaret, while he was renovating the apartment and lived there with her for 15 years.
The couple purchased a townhouse in Gramercy Park for $6.9 million in 2005, after they had their second child. The Times featured the home on East 18th Street in a 2016 article, including photos of Towles’ wood-panneled study, bright yellow living room and antique decor.
Engel & Völkers’ Paul Gavriani, Vincent Falcone and Darielle Hertz had the listing for Towles’ condo.
NYC Deal of the Week
The priciest deal to hit city records this week was a townhouse in the West Village, which traded for $14.6 million. The historic home at 83 Jane Street was sold by film director Tanya Wexler, known for her 2011 film “Hysteria” starring Hugh Dancy and Maggie Gyllenhaal, to a buyer, whose identity is shielded by an LLC.
The five-story abode, which sold for $2,400 per square foot, was converted from an apartment building into a single-family home in 1999. It has five bedrooms and four bathrooms and features a roof deck, garden and balcony.
Compass’ Hudson Advisory Team had the listing. Douglas Elliman’s Raymond Dillulio brought the buyer.
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Residential
New York
“Bullied and robbed”: former BHS agent sues firm over clawbacks