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Real Estate ToB Document

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REAL ESTATE TERMS OF BUSINESS (TOB)

Parties

This Terms of Business is entered into between Broker: (License No.: ) and Client (Owner/Seller): .

Property Identification

Engagement and Scope

Broker is engaged as the exclusive listing agent for the Property at a Listing Price of . This engagement commences on and terminates on unless earlier terminated in accordance with this Agreement.

Broker's authority includes marketing, negotiation of offers, coordination of showings and escrow, and preparation of customary transaction documents. Client authorizes Broker to place the Property on applicable marketing services and to engage cooperating brokers under the terms below.

Compensation and Financial Terms

Commission is earned upon the occurrence of a Completed Transaction: execution of a binding purchase agreement for the Property or closing thereon, whichever occurs first. If the transaction fails due to Client's breach, Client remains obligated to pay the commission.

Inspections, Contingencies and Possession

Client shall permit inspections and provide reasonable access. Unless otherwise agreed in writing, Buyer contingencies shall be satisfied or waived within the Inspection Period. If contingencies are not timely satisfied, Broker will assist in negotiating remedies but Broker is not a guarantor of buyer performance.

Disclosures and Property Condition

The Client represents and warrants to Broker that, to the Client's actual knowledge, the following statements are accurate. Client will promptly disclose any material facts affecting the Property.

Lead-based paint disclosure: Yes No

Mold or fungal growth known: Yes No

Prior material structural damage or repair: Yes No

Maintenance; Utilities; Insurance

Until closing or transfer of possession, Client shall maintain the Property, its utilities and hazard insurance in commercially reasonable condition. Client shall be responsible for any damage resulting from Client's failure to maintain the Property prior to transfer of possession.

Default, Remedies and Indemnity

In the event of a material breach by either party, the non-breaching party may pursue all remedies available at law or in equity, including specific performance and damages. Client agrees to indemnify Broker for claims arising from Client's false representations or failure to disclose material facts, except to the extent caused by Broker's gross negligence or willful misconduct.

Confidentiality; Agency

Broker will treat confidential information received from Client as required by law and agency duties. Broker's duties and the existence of any dual or designated agency relationship shall be disclosed to Client in writing as required by applicable law.

Governing Law; Entire Agreement

This Agreement shall be governed by the substantive laws of the state in which the Property is located. This document constitutes the entire agreement between the parties with respect to the matters contained herein and supersedes all prior negotiations and understandings, whether written or oral. Any amendment must be in writing and signed by both parties.

Acknowledgment

By signing below, the parties acknowledge that they have read and understood the terms of this Agreement, that they have authority to enter into this Agreement, and that the representations and warranties contained herein are true and correct as of the date of signature.

Broker (Print Name):

By:

Date:

Client (Print Name):

By:

Date:

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What the Real Estate ToB Document Is and When It Applies

The Real Estate ToB Document (Terms of Business) is a written agreement between a real estate professional and a client that sets out services, fees, authority to act, duration, and key obligations. It clarifies commission arrangements, marketing responsibilities, exclusivity or non-exclusivity, and dispute resolution mechanics. In practice it is used for listing, buyer representation, property management engagements, and referral arrangements. The document is often executed at the start of a relationship and can be delivered, signed, and stored electronically consistent with U.S. e-signature law.

Why a Clear Terms of Business Matters

A concise ToB reduces ambiguity about duties, fees, and timelines, which lowers litigation and commission disputes. When properly executed it documents consent, supports enforceability, and makes rights and remedies explicit under state contract law and brokerage regulations.

Why a Clear Terms of Business Matters

Who Commonly Uses a Real Estate ToB Document

Use the ToB to set expectations early; tailor it to the transaction type and applicable state licensing requirements.

  • Real estate brokers and agents who represent sellers or buyers in residential and commercial transactions.
  • Property managers and leasing firms setting management fees, service scope, and tenant placement terms.
  • Investors and asset managers engaging broker services or procuring exclusive buying arrangements.

Core Sections to Include in a Professional ToB

A well-drafted ToB organizes obligations and remedies so both parties understand scope, costs, and the process for ending the engagement.

Parties

Full legal names, business entity type, and contact details for each contracting party to ensure enforceability and accurate service of notices.

Scope of Services

Clear description of services the agent or manager will provide, including marketing channels, showing protocol, lease management, and any out-of-scope services.

Compensation

Commission or fee structure with precise percentages or flat fees, payment timing, escrow handling, and conditions that trigger payment.

Term and Termination

Effective date, duration, renewal terms, and termination rights including notice periods and consequences for early termination.

Confidentiality

Nonpublic information protections, permitted disclosures, and any exceptions required by law or regulatory reporting.

Compliance & Disclosures

State-required property disclosures, lead paint and hazard notices, and applicable licensing and advertising disclosures.

Essential Fields to Capture

Full Legal Names: Exact legal name
Property Address: Street, city, state, ZIP
Compensation: Rate or fee stated
Effective Date: MM/DD/YYYY format
Signatory Role: Agent, broker, owner
Notary Block: If required by state

Step-by-Step: Completing a ToB Document

Follow a consistent sequence to prepare, review, and finalize the ToB to minimize errors and meet legal and regulatory obligations.

  • 01
    Gather Documents: Collect IDs, property data, existing disclosures, and any prior agreements for reference.
  • 02
    Enter Parties and Property: Populate full legal names and the precise property address or legal description.
  • 03
    Specify Fees and Term: Record commission, payment timing, deposit rules, and the agreement duration clearly.
  • 04
    Review and Sign: Confirm fields, add required disclosures, then obtain signatures and any notarization or witness attestations.

Configuring an Online ToB Workflow

Set up fields, signer order, and required authentication before sending the document for electronic signature.

Field Configuration
Signature Field Required for each signer; date linked to signature
Initials Field Optional for clause-by-clause acknowledgement
Conditional Fields Show fee details only if exclusivity box checked
Authentication Email link or SMS code; use stronger ID for high-value deals

Where to Send or File the Completed ToB

The ToB is typically retained by brokerage and provided to the client; certain state rules require copies be deposited with the broker or retained in the transaction file.

  • Broker File: Store original signed copy in the brokerage transaction file.
  • Client Copy: Provide a complete signed copy to the client immediately after execution.
  • Title / Escrow: Deliver required fee or commission instructions to escrow when closing proceeds require it.
  • Regulator Audit: Retain records to satisfy state real estate commission audits or complaint inquiries.

Digital Delivery and Integration Considerations

Ensure your e-signature provider supports audit trails, secure storage, and any integration you rely on for CRM or transaction management.

  • Supported Formats: PDF and DOCX accepted
  • Integrations: Salesforce, Microsoft 365, Google Workspace supported
  • Authentication: Email link, SMS code, or advanced ID verification

Common ToB and Transaction Deadlines to Track

Track contractual and contingency deadlines closely; missed dates can affect deposits, contingencies, and closing schedules.

Effective Date:

Date obligations begin and deadlines are measured from

Inspection Contingency:

Typical window: 7–15 days after acceptance

Financing Contingency:

Commonly 21–45 days; depends on lender timing

Closing Date:

Negotiated date for deed and funds exchange

Termination Notice:

Specify required days’ notice for non-renewal or termination

Common Mistakes When Preparing a ToB

  • Using informal or inconsistent party names that complicate enforcement or payment routing.
  • Failing to state the exact commission formula and exceptions for co-brokers or buyer-sourced deals.
  • Omitting state-mandated disclosures or misplacing lead-based paint and hazard notices when required.
  • Skipping required witness or notary steps in states where deeds or certain acknowledgements need them.

Risks and Consequences of an Incorrect ToB

Commission Disputes: May lead to litigation or arbitration
Regulatory Sanctions: State licensing fines or discipline
Contract Voidability: Material defects can void agreement
Escrow Delays: Funds or closing postponed
Tax Withholding: Incorrect payee info triggers backup withholding
Reputational Harm: Client complaints and lost referrals

eSignature Pricing and Feature Snapshot

Comparison of common vendor entry pricing and selected feature availability. Confirm current plan details with each vendor before purchase.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by plan Varies by plan Varies by plan Varies by plan
Bulk Send Yes (Business Premium) Varies by plan Varies by plan Varies by plan Varies by plan
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Frequently Asked Questions About the Real Estate ToB

Answers to common practical and legal questions encountered when completing, signing, and storing a ToB.


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