When is it essential for a licensee to have written documentation in place for transactions?

Having written documentation in place is crucial when commissions are being shared because it establishes clear terms and conditions related to compensation among all parties involved. This documentation helps to prevent misunderstandings and disputes regarding how commissions will be divided, as it provides a tangible reference point that outlines the agreed-upon percentages or amounts to be paid out to each party for their role in the transaction.

In the context of real estate, written agreements are not only a best practice but often required by law to ensure transparency and accountability in transactions involving financial compensation. Documentation serves as protection for licensees and clients alike, ensuring that everyone understands their rights and obligations.

Other instances, such as during a real estate sale or while entering negotiations, may also benefit from written agreements, but they are not exclusively tied to the sharing of commissions. Leaving these aspects without documentation could lead to use of verbal understandings, which can often become contentious and lead to disputes.