Partial Payment Transactions

Partial Payment Transactions are transactions that require commissions to be paid out with installments.  These type of transactions are linked through the “Main” transaction keeping the same transaction number and appending a letter to the end for tracking purposes.  For example, 20170107 is the main transaction, 20170107A, 20170107B etc. would be partial payment transactions.

A partial payment transaction should not be created unless you are in receipt of the commission. This will avoid any potential problems of not receiving the amount of commission you were expecting for that particular partial payment transaction. Partial Payment transactions work on a decumulative principle, meaning for each partial payment transaction created, closed and processed, the next partial payment transaction created will automatically populate the commission receivable values with the balance of commission receivable (main transaction less partial payment transaction A, B, C, etc.).

Why would you need to record a Partial Payment transaction?

New Home Sales

With a new home sale, it is usually the Builder (their Attorney or the Selling Broker) who holds the deposit, meaning that your brokerage would more than likely be on the Buying end of this type of the transaction.

Typically, a new home sales transaction could involve multiple payments of commission to the Buying Broker.  For example, at the time a firm transaction is accepted by all parties:

  1. An introductory commission fee could be paid to the co-operating broker for $1000.00.
  2. When construction of the home begins, 50% ($9500.00) of the remaining commission could be paid to the buying broker.
  3. On closing, the final 50% ($9500.00) of the commission due would be paid to the buying broker (for a total commission of $20000.00).

Late or Non-Payments of Commission 

The Real Estate Council of Ontario is just one of the local governing bodies that stipulates that commission be paid to all parties within ten (10) business days of the closing date of a transaction.

In the event a commission payment(s) owing to a Controlling (Selling) Broker is not received within the above time frame, the Controlling Broker must disburse any monies currently held on deposit proportionately between the selling side and buying side (if applicable), of the transaction.

Upon receipt of the balance of commission, the broker is required to disburse this amount accordingly.  For example, if a Controlling Broker received a deposit of $10000.00 held against a total commission amount owing of $25000.00, the balance due to the broker at closing would be $15000.00. If, after 10 days, the balance of commission was not received, the Broker would be obligated to pay out the $10000.00 on hand, disbursing to all parties proportionately, based on the % of side, rules and plans associated with the transaction. Upon receipt of the $15000.00 balance of commission, funds would be disbursed a second time based on the same rules as above.

Alternatively, if the Seller does not have money to close a transaction on the specified closing date, arrangements could be made with the brokerage for the Seller to pay the balance of commission owed to the Selling Broker through installment payments.

Partial Payment Transaction Guidelines and Restrictions:

  1. Each commission amount received will be treated as an individual transaction (however, still linked to all other related transactions) and users can close, process and integrate each of these payments independently of each other.
  2. Each payment will be disbursed to all parties involved proportionately based on the % of end, commission rules and commission plans associated with each payment as required.
  3. Commission plan(s) can be assigned to the Agent on the fly or manual calculations can be entered (replacing the Agent’s default plan) as required.
  4. Users will have the ability to edit and/or override Withholdings, Manager Override, Other Fees & Transaction Fee amounts as needed for each partial payment.
  5. Selected reports will reflect all related transaction(s) and their detail collectively as a sum total and individually, as defined by the user.
  6. All partial payment transactions must be closed, processed and integrated before closing the main transaction.
  7. Force Validation – If the main transaction has been flagged for Force Validation, this means that the sum all the partial payments closed, processed and integrated MUST EQUAL the main transaction at closing. Alternatively, if the main transaction does not Force Validation then it will be up to the user to ensure that all partial payment transactions equal the total commission receivable on the main transaction.
  8. If the main transaction is voided, then all the partial payment transaction statuses will change to void. However, if there are any partial payment transactions that have already been closed, processed and integrated, the main transaction can not be voided until the processed partial payment transaction(s) have been reversed.
  9. If the main transaction is closed, it must be reversed before any of its partial payments can be reversed. Individual payments can then be voided and/or reversed on their own without affecting other related partial transaction(s).
  10. Partial payment transactions do not support “Agent Advances”. If an “Agent Advance” is attached to the main transaction or partial payment transaction(s), you will receive warning that the Agent advance cannot be assigned. Agent advances must be detached and/or reset to $0 and/or re-assigned, otherwise the transaction cannot be closed.
  11. A partial payment transaction can not be a main transaction to other partial payment transactions.
  12. Partial Payment transactions will inherit most values from the main transaction, except trust deposit and interest information. This will include the commission plan as assigned to the Agent based, including the commission plan type and anniversary start and end dates. This means, that if the main transaction’s closing date is not within the specified date range for its calculation for a partial payment transaction “A, B, C, etc.” you may need to change the date of the partial payment transaction to the date that you will be processing the transaction, to ensure all commission plan calculations are correct.
  13. lease take note that if any changes have been made to any open partial payment transactions, other related partial payment transactions will not be automatically be recalculated, changes will become manual and defined by the user.How to Enter Partial Payment Transactions

    Scenario 1 – Buying End of the Transaction

     

    1. Transaction is entered exactly as any other Buying end transaction. Please see Entering a Transaction for full details.

     

    Main transaction created in step 1, can then be edited and Partial Payment can be initiated by placing check mark in appropriately labelled box. Force Validation will auto-flag, however, if you do not want to Force Validation, remove the check mark from this box. By deselecting this flag, it will be up to the user, to ensure that the commission receivable (detailed on the main transaction) equals the sum of the commission receivable for all the partial payment transactions.  Click SAVE. 

    1. Once the main transaction has been saved, the “Add Partial Payment” button will become enabled.

     

     

    1. To create the secondary transaction, click on “Add Partial Payment” from the main transaction. You will notice that the transaction number will append a letter to the end of the transaction number. Click SAVE to save the partial payment transaction.
    2. Once a partial payment transaction has been saved, you may now edit with the commission amounts that you have received for this partial payment transaction on the Commission tab. You will notice that the override flag has already been initiated for you.  At this time, ensure that all the data for this partial payment transaction is correct.
      1. nter the amount of the commission receivable (broken down into commission and Tax). For example, $5000.00 and $300.00.
      1. If you need to override and/or change the Agent Detail for this partial payment transaction, you can do so now. Any amounts for Other Fees, Transaction Fees, Manager’s Overrides and Withholdings can be overwritten. However, if Force Validation has been selected, all payments will still need to balance to the amounts entered in the main transaction.  Once you have made your changes, click SAVE.

       

      1. You may now close this partial payment transaction.

       

      1. Continue this process until all commissions receivable have been paid out based on the commission receivable on the main transaction and each subsequent partial payment transaction created. The commission amount will automatically populate with the remaining commission receivable. Remember that you can only create a partial payment transaction by clicking on the Add Partial Payment button on the main transaction.

       

      1. Once the commission receivable has been paid out in full, you can close the main transaction. Reminder: you cannot take any Agent Expense Payments when closing the main transaction.

       

      All applicable Additional Reports, the Real Estate Trust Ledger report, Agent history calculations and the D1 format of the Transaction Record sheet will be updated with each partial payment transaction closed, processed and integrated to QuickBooks®.

       

      All QuickBooks®  checks/cheques, deposits and journal entries will flag with the appended transaction number and address.

       

      If this is the last payment of a Partial Payment transaction, you will be prompted with a reminder to close the “Main” transaction.  

      Scenario 2 – Selling End of the Transaction with a Real Estate Trust Deposit

       

      1. Transaction is entered exactly as any other Selling end transaction, including real estate trust deposits and/or interest. Please see Entering a Transaction for full details.

       

      1. Main transaction created in Step 1, can then be edited and Partial Payment can be initiated by placing check mark in appropriately labelled box. Force Validation will auto-flag, however, if you do not want to Force Validation, remove the check mark from this box. By deselecting this flag, it will be up to the user, to ensure that the commission receivable (detailed on the main transaction) equals the sum of all partial payment commissions. Click SAVE.

       

       

       

      1. Once the main transaction has been saved, the “Add Partial Payment” button will become enabled
      2. o create the secondary transaction, click on “Add Partial Payment” from the main transaction. You will notice that the transaction number will append a letter to the end of the transaction number. Click SAVE to save the partial payment transaction.
        1. Once the main transaction has been saved, the “Add Partial Payment” button will become enabled.

        1. To create the secondary transaction, click on “Add Partial Payment” from the main transaction. You will notice that the transaction number will append a letter to the end of the transaction number. Click SAVE to save the partial payment transaction.Once a partial payment transaction has been saved, you may now edit with the commission amounts that you have received for this partial payment transaction on the Commission tab. You will notice that the override flag has already been initiated for you.  At this time, ensure that all the data for this partial payment transaction is correct.
        2. Real Estate Trust Deposits – although the real estate trust deposit has been entered on the main transaction, it can ONLY be disbursed through a partial payment transaction. The easiest way to do this is to enter the corresponding disbursement for the deposit (whether full amount or not) through the Add Deposit button on the Depo tab of the first partial payment transaction. Please see Entering a Transaction for full details. This also applies to any balance that may be due to the Seller for deposits that exceed the total commission payable.  If however, you forget to issue the balance due to the Seller or the interest amount to the Buyer you will always be prompted with one of the following warnings.
          1. In a two bank accounting system, the balance receivable from the Seller MUST be deposited to the Main transaction before it can be disbursed from any of the other partial payment transactions.Do not be concerned about the real estate trust ledger balancing at this time – all real estate trust ledger detail will be updated accordingly, once the partial payment transaction has been closed, processed and integrated to QuickBooks®.
            1. If you need to override and/or change the Agent Detail for this partial payment transaction, you can do so now. Any amounts for Other Fees, Transaction Fees, Manager’s Overrides and Withholdings can be overwritten. However, if Force Validation has been selected, all payments will still need to balance with the main transaction.  Once you have made your changes, click SAVE.
              1. You may now close this partial payment transaction.

               

              1. The Review Closing will display similarly to a regular Selling end transaction, except there will be no Receivable from the Seller.
                1. Continue this process until the total commission receivable has been paid out based on the commission receivable on the main transaction and each subsequent partial payment transaction created. The commission amount will automatically populate with the remaining commission receivable.

                 

                Remember that you can only create a partial payment transaction by clicking on the Add Partial Payment button on the main transaction.

                1. Once all the commission receivable has been paid out in full, you MUST now enter any interest earned on the deposit before closing the main transaction. Navigate to the main transaction, click on edit and complete the interest details as required.
                2. All applicable Additional Reports, the Real Estate Trust Ledger report, Agent history calculations and the D1 format of the Transaction Record sheet will be updated with each partial payment transaction closed, processed and integrated to QuickBooks®.   All QuickBooks® Checks/cheques, deposits and journal entries will flag with the appended transaction number and address.  

                  If this is the last payment of a Partial Payment transaction, you will be prompted with a reminder to close the “Main” transaction.  This will ensure that any interest due to the Buyer/or applicable resource will be tracked accordingly, as Interest can only be disbursed from the Main transaction.

                  1. You may now SAVE and then close this main transaction. Reminder: you cannot take any Agent Expense Payments when closing the main transaction.

                  A sample of the Review Closing is displayed below.  Its only purpose is to integrate the interest earned on the deposit and any processing fees that the brokerage is charging for the issuance of this interest.

                  All applicable Transaction Reports, the Real Estate Trust Ledger report, Agent history calculations and the D1 format of the Transaction Record sheet will be updated with each partial payment transaction closed, processed and integrated to QuickBooks®.

                   

                  All QuickBooks® Checks/cheques, deposits and journal entries will flag with the appended transaction number and address.

                   

                  If this is the last payment of a Partial Payment transaction, you will be prompted with a reminder to close the “Main” transaction.  This will ensure that any interest due to the Buyer/or applicable resource will be tracked accordingly, as Interest can only be disbursed from the Main transaction.

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