Legal Definitions - brokerage

The term "brokerage" has two primary meanings in a legal and business context:

• The business or office of a broker

  This refers to the professional service or the organization that acts as an intermediary, facilitating transactions between two parties. A brokerage firm employs brokers who specialize in various fields, such as real estate, investments, or insurance, to connect clients with suitable products or opportunities.

  • Example 1: After deciding to sell her antique car collection, Maria engaged a specialized automotive brokerage firm known for handling high-value classic vehicles. The firm's experts would market her cars to potential buyers globally.

    Explanation: In this scenario, "brokerage" refers to the business entity (the firm) that provides the service of connecting sellers of antique cars with interested buyers.

  • Example 2: David started working for a new mortgage brokerage, where his role was to help clients find the best home loan rates by comparing offers from multiple banks and lenders.

    Explanation: Here, "brokerage" describes the business that acts as an intermediary, assisting individuals in securing a mortgage by navigating various financial institutions.

• A broker's fee

  This refers to the commission or payment a broker receives for successfully facilitating a transaction or providing their services. This fee is typically a percentage of the transaction value or a fixed amount, agreed upon in advance.

  • Example 1: When the art dealer finally sold the rare painting, the agreed-upon brokerage of 15% of the sale price was paid to the art broker who arranged the transaction.

    Explanation: In this instance, "brokerage" denotes the specific fee (15% of the sale price) that the art broker earned for their role in selling the painting.

  • Example 2: Many online trading platforms charge a small brokerage fee for each stock or bond transaction executed through their service, covering the cost of processing the trade.

    Explanation: Here, "brokerage" refers to the transactional fee charged by a financial broker for executing an investment trade on behalf of a client.

  • Example 3: The company paid a significant brokerage to the commercial real estate agent who successfully negotiated a long-term lease for their new office space in the city center.

    Explanation: This example illustrates "brokerage" as the payment made to the real estate agent for their service in securing a lease agreement for the company.