Benny L. Kass Mailbag

No standard formula for agent commission

Q:How do agents get commission on rental property?-- Peter

Answer: There is no standard formula to compensate a real estate agent for finding a tenant for you. From my experience, most agents will want one month's rent for their commission.

However, this is negotiable. If, for example, you want the agent to manage the property for you (which is usually a good idea so that you won't be bothered every time the tenant wants a light bulb changed), the agent may take a percentage of the monthly rent -- ranging from 6 percent to 10 percent.

You should sign an agreement with the agent before moving forward. That agreement will spell out the terms and conditions of their employment.

Incidentally, neither landlords nor managers should be required to change the light bulbs.

Q:My brother and I own a single-family house that we rent to our sister. The mortgage contains a due-on-sale clause. We would like to sell the house to our sister. She has the income to make the monthly payments, but she can't qualify for a loan because of bad credit. I was wondering if the due-on-sale clause is enforceable if my brother and I were to sell the house to our sister? -- Jim

Answer: As I read the law, a transfer between siblings is not exempt from the "due-on-sale" clause. You can do one of two things: First, talk with the lender and explain the situation. You have to understand that you and your brother will remain obligated on the loan, should your sister not make all of the monthly mortgage payments. Perhaps the lender will decide that because this is a family transaction, it will not assert the due-on-sale clause.

Alternatively, if your parents are alive, you can transfer the property to them (or to one of them) and then the property can be transferred again to your sister. Because these transactions are exempt from the due-on-sale clause, this will work. And in most states, there is no transfer or recordation tax between parents and children -- only a nominal recording fee to the county.

Loopholes exist in many laws, and there is no crime in being creative.

Benny L. Kass is a practicing attorney in Washington. Questions for this column can be submitted to .