# SFSB-3: Broker Fee & Engagement Agreement **Seller Finance Standards Board | Published: 2026 | Version 1.0** --- ## Purpose This standard engagement agreement governs the relationship between a note holder or originator (the "Client") and a note broker engaged to market and facilitate the sale of a seller-financed promissory note. The SFSB publishes this form to promote transparency in broker compensation, protect clients from undisclosed dual representation, and establish enforceable standards for broker conduct in the seller finance market. ## Scope This agreement applies to any engagement in which a licensed or unlicensed intermediary agrees to identify, contact, or present prospective buyers for a seller-financed note arising from the sale of a business, commercial real estate, or business assets. Parties should verify applicable state licensing requirements for note brokering activity in their jurisdiction prior to execution. --- ## NOTE BROKER ENGAGEMENT AGREEMENT **THIS BROKER ENGAGEMENT AGREEMENT** (this "Agreement") is entered into as of [DATE] (the "Effective Date") by and between: **CLIENT:** [CLIENT LEGAL NAME], a [STATE] [entity type / individual], with its principal address at [CLIENT ADDRESS] ("Client"); and **BROKER:** [BROKER LEGAL NAME / DBA], a [STATE] [entity type / individual], with its principal address at [BROKER ADDRESS] ("Broker"). Client and Broker are sometimes referred to herein individually as a "Party" and collectively as the "Parties." --- ### ARTICLE I — ENGAGEMENT AND SCOPE **1.1 Engagement.** Client hereby engages Broker, and Broker hereby accepts such engagement, to market, identify prospective buyers for, and facilitate the negotiation and sale of that certain seller-financed promissory note described in Schedule 1 attached hereto (the "Note"), subject to the terms and conditions of this Agreement. **1.2 Services.** Broker's services under this Agreement shall include: (a) preparing or assisting in the preparation of a note summary or marketing package for distribution to prospective buyers; (b) identifying and contacting qualified prospective note buyers; (c) presenting written offers to Client promptly upon receipt; (d) coordinating due diligence between Client and prospective buyers; and (e) facilitating closing logistics with Client's selected buyer. Broker shall not have authority to bind Client to any offer, contract, or transaction without Client's express written approval. **1.3 Exclusivity.** ☐ **Non-Exclusive Engagement:** Client retains the right to engage other brokers and to directly market the Note. If Client sells the Note directly to a buyer that was not introduced by Broker during the term of this Agreement, no Broker Fee shall be owed. ☐ **Exclusive Engagement:** During the term of this Agreement, Client shall not engage any other broker to market the Note and shall direct all prospective buyer inquiries to Broker. If Client sells the Note directly (other than to a buyer introduced by Client prior to the Effective Date and disclosed on Schedule 2), the Broker Fee set forth in Section 3.1 shall remain payable. *(Check one. The default under SFSB best practices is Non-Exclusive unless both Parties agree otherwise in writing.)* **1.4 No Authority to Contract.** Broker is engaged as an independent contractor and is not an employee, agent, or partner of Client. Broker has no authority to execute contracts, accept offers, modify note terms, or make representations on behalf of Client. --- ### ARTICLE II — BROKER'S OBLIGATIONS **2.1 Present All Offers.** Broker shall present to Client, in writing, all bona fide offers received from prospective buyers promptly and without delay, regardless of whether Broker recommends acceptance of the offer. **2.2 Maintain Confidentiality.** Broker shall treat all information provided by Client — including the Note's terms, payment history, borrower identity, and collateral details — as confidential and shall not disclose such information to any third party without Client's prior written consent, except as necessary to market the Note to prospective buyers under a confidentiality obligation. **2.3 Qualified Buyers Only.** Broker shall use commercially reasonable efforts to present the Note only to prospective buyers who are financially capable of completing the transaction and who have represented, in writing or to Broker's reasonable knowledge, that they are sophisticated investors experienced in the purchase of seller-financed notes. **2.4 Accurate Representations.** Broker shall not make any representation to prospective buyers regarding the Note, its payment history, or the collateral that Broker knows to be false or misleading. Broker shall rely solely on information provided by Client, and shall not independently verify or vouch for such information. **2.5 Prompt Reporting.** Broker shall provide Client with periodic updates (no less than every [14] calendar days during active marketing) regarding outreach activity, prospective buyer interest, and any offers received or pending. **2.6 Disclosure of Dual Representation.** If Broker represents or has a financial relationship with a prospective buyer simultaneously with representing Client in this transaction (a "Dual Representation"), Broker shall disclose such relationship to Client in writing prior to presenting any offer from such buyer. See also Section 6. --- ### ARTICLE III — BROKER COMPENSATION **3.1 Broker Fee.** Client agrees to pay Broker a success fee (the "Broker Fee") equal to [___]% of the Purchase Price actually received by Client at Closing, or $[FLAT FEE], whichever is applicable, as selected below: ☐ **Percentage of Purchase Price:** ______% of the Purchase Price paid to Client at Closing. ☐ **Flat Fee:** $________________. **3.2 No Upfront Fees — SFSB Best Practice.** In accordance with SFSB best practices, no fees, retainers, or advance payments shall be charged to Client under this Agreement prior to a successful Closing. The Broker Fee is earned solely upon the actual closing of a purchase and sale transaction and receipt by Client of the Purchase Price. Any provision to the contrary is void and unenforceable under this Agreement. **3.3 Who Pays the Broker Fee.** The Broker Fee shall be paid by: ☐ Client (Seller) ☐ Buyer ☐ Split equally between Seller and Buyer ☐ Other: ________________________ *Note: If Buyer is paying or contributing to the Broker Fee, this fact must be disclosed to Client in writing prior to Closing and must be disclosed to Buyer in writing prior to the execution of any purchase agreement.* **3.4 Timing of Payment.** The Broker Fee shall be due and payable at Closing, simultaneously with the receipt by Client of the Purchase Price. Broker may direct Client to instruct the closing agent to disburse the Broker Fee directly from Closing proceeds. **3.5 No Fee if No Close.** If a transaction does not close for any reason — including Client's election not to sell, Buyer's failure to fund, or material failure of due diligence — no Broker Fee shall be owed, and Client shall have no payment obligation to Broker except as expressly set forth in Section 3.6. **3.6 Expense Reimbursement.** *(Optional — check if applicable)* ☐ Client agrees to reimburse Broker for pre-approved, documented out-of-pocket expenses (travel, third-party marketing costs) not to exceed $________ in the aggregate, whether or not a Closing occurs. Broker shall obtain written pre-approval from Client before incurring any reimbursable expense exceeding $________. ☐ No expense reimbursement is applicable to this engagement. --- ### ARTICLE IV — CLIENT'S OBLIGATIONS **4.1 Provide Accurate Information.** Client shall promptly provide Broker with accurate, complete, and current information regarding the Note, including the executed promissory note, payment history, collateral description, and any modifications or defaults. Client acknowledges that Broker will rely on this information in marketing the Note and that inaccurate information provided by Client may expose Client to liability. **4.2 Respond Timely.** Client shall respond to all offers, due diligence requests, and Broker communications within [5] business days. Unreasonable delay in responding to offers or due diligence requests may impair Broker's ability to close transactions. **4.3 Notify of Direct Contact.** If any prospective buyer contacts Client directly (other than through Broker) during the term of this Agreement, Client shall promptly notify Broker in writing, identifying the prospective buyer and the nature of the contact. **4.4 Notify of Material Changes.** Client shall promptly notify Broker of any material change in the Note's status, including any payment delinquency, default, modification, or pending legal action, that occurs during the term of this Agreement. **4.5 Decision Authority.** Client retains sole and absolute discretion to accept or reject any offer presented by Broker. Nothing in this Agreement obligates Client to sell the Note. --- ### ARTICLE V — TERM AND TERMINATION **5.1 Term.** This Agreement shall commence on the Effective Date and shall continue for a period of [90] days (the "Initial Term"), unless earlier terminated pursuant to this Article V. The Agreement shall automatically renew for successive [30]-day periods unless either Party provides written notice of non-renewal at least [10] business days prior to the end of the then-current term. **5.2 Termination by Client.** Client may terminate this Agreement at any time upon [10] business days' written notice to Broker, subject to the tail period provisions of Section 5.4. **5.3 Termination by Broker.** Broker may terminate this Agreement at any time upon [10] business days' written notice to Client, in which case no Broker Fee shall be owed for any transaction not closed prior to the effective date of termination. **5.4 Tail Period.** Following expiration or termination of this Agreement for any reason, Broker shall be entitled to the Broker Fee for any transaction that closes within [90] calendar days after the termination date (the "Tail Period"), provided that: (a) the buyer in such transaction was introduced to Client by Broker during the term of this Agreement; and (b) Broker delivers to Client, within [5] business days of termination, a written list of all buyers introduced by Broker during the term (the "Introduced Buyer List"). No Broker Fee shall be owed for transactions with buyers not on the Introduced Buyer List. --- ### ARTICLE VI — DUAL REPRESENTATION DISCLOSURE **6.1 Definition.** Dual Representation occurs when Broker simultaneously represents or receives compensation from both Client (as the seller of the Note) and a prospective buyer (as the purchaser of the Note) in the same transaction. **6.2 Disclosure Required.** Broker shall disclose to Client, in writing and prior to presenting any offer, any existing or anticipated Dual Representation. Such disclosure shall identify the buyer, the nature of Broker's relationship with such buyer, and the compensation Broker expects to receive from such buyer. **6.3 Consent Required.** Broker shall not proceed with a transaction involving Dual Representation without Client's express written consent, given after full disclosure as required by Section 6.2. **6.4 No Reduction of Obligations.** Dual Representation, if consented to by Client, does not reduce Broker's obligations to present all offers promptly and accurately, or to act in good faith toward Client. --- ### ARTICLE VII — GENERAL PROVISIONS **7.1 No Guarantee of Sale.** Broker makes no representation or guarantee that the Note will be sold, that a buyer will be found, or that Client will receive any particular price for the Note. Broker's obligation is to make commercially reasonable efforts to market the Note during the term of this Agreement. **7.2 Licensing Disclaimer.** Client acknowledges that note brokering licensing requirements vary by state and that Broker has represented to Client whether Broker holds any applicable licenses. Client is encouraged to independently verify applicable licensing requirements in its jurisdiction. **7.3 Governing Law.** This Agreement shall be governed by and construed in accordance with the laws of the State of [STATE]. **7.4 Dispute Resolution.** Any dispute arising out of or relating to this Agreement shall be resolved by binding arbitration in [CITY, STATE] under the rules of [JAMS / AAA]. **7.5 Entire Agreement.** This Agreement, including Schedule 1 and Schedule 2 (if any), constitutes the entire agreement of the Parties with respect to the engagement described herein and supersedes all prior understandings, oral agreements, and negotiations. **7.6 Counterparts / Electronic Signatures.** This Agreement may be executed in counterparts; electronic signatures are binding. --- ### SIGNATURE PAGE **CLIENT:** Signature: ________________________________ Name: [CLIENT NAME] Title: [TITLE, IF ENTITY] Date: ____________________ Email: ____________________ **BROKER:** Signature: ________________________________ Name: [BROKER NAME] Title: [TITLE, IF ENTITY] Date: ____________________ Email: ____________________ License # (if applicable): ____________________ State(s) of licensure: ____________________ --- ### SCHEDULE 1 — NOTE DESCRIPTION Note Date: ____________________ Original Principal: $____________________ Current UPB (estimated): $____________________ Interest Rate: ______% Monthly Payment: $____________________ Maturity Date: ____________________ Collateral: ____________________ Current Servicer: ____________________ Minimum Acceptable Price (confidential — Broker eyes only): ☐ Disclosed to Broker ☐ Not disclosed --- ### SCHEDULE 2 — EXCLUDED BUYERS (PRE-EXISTING PROSPECTS) *List any prospective buyers known to Client prior to the Effective Date whom Client has already contacted directly. Sales to these buyers shall not give rise to a Broker Fee.* | Buyer Name | Date of Prior Contact | Notes | |---|---|---| | | | | | | | | --- *This document is published by the Seller Finance Standards Board (SFSB) as a best practice guideline. It does not constitute legal advice. Members and users should consult qualified legal counsel for jurisdiction-specific requirements.* *© 2026 Seller Finance Standards Board. All rights reserved. Members may reproduce for internal use with attribution.*