We use cookies to improve security, personalize the user experience,
enhance our marketing activities (including cooperating with our marketing partners) and for other
business use.
Click "here" to read our Cookie Policy.
By clicking "Accept" you agree to the use of cookies. Read less
What is Overriding Commission? A Comprehensive Legal Overview
Definition & Meaning
Overriding commission refers to a type of commission that a field office manager earns based on the business generated by agents within their office. This commission is particularly common in industries like insurance, where agents may have exclusive agreements with an insurance company for specific territories or classes of business. Essentially, an overriding commission allows a general agent to retain a portion of the commission after compensating the producing agents whose work they supervise.
Table of content
Legal Use & context
Overriding commissions are primarily used in the insurance sector but can also apply in other sales-driven industries. In legal practice, this term may arise in discussions about commission agreements, employment contracts, and compensation structures. Users can manage related forms or agreements through resources like US Legal Forms, which provides templates drafted by attorneys to ensure compliance with relevant laws.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: An insurance agency has three agents working under a general agent. Each agent sells policies within a designated territory. The general agent receives a percentage of the total commissions earned by these agents as an overriding commission.
Example 2: A real estate brokerage offers its agents a commission structure that includes an overriding commission for the broker based on the total sales made by all agents in the office. (hypothetical example)
State-by-state differences
Examples of state differences (not exhaustive):
State
Commission Regulations
California
Requires clear disclosure of commission structures in contracts.
Texas
Allows for flexible commission agreements but mandates written contracts.
New York
Regulates commission agreements under specific real estate laws.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Commission
A fee paid to an agent based on sales made.
Override
A general term for a commission that is earned on top of another commission.
Common misunderstandings
What to do if this term applies to you
If you are involved in an agreement that includes overriding commissions, ensure that all terms are clearly outlined in your contract. It may be beneficial to consult with a legal professional to understand your rights and obligations. Additionally, you can explore US Legal Forms for templates that can help you draft or review your agreements.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.
Common in the insurance and real estate industries.
Typically based on the total sales made by agents.
Must be clearly outlined in contracts to avoid disputes.
Key takeaways
Frequently asked questions
Overriding commission is earned by a manager based on the performance of their agents, while regular commission is earned directly by the agents for their sales.
Yes, overriding commissions are legal as long as they are disclosed and agreed upon in contracts.
Make sure all terms are clearly outlined in writing and consider consulting a legal professional for guidance.