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Real estate agents commissions: keeping a vendor honest

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Given the tough economic climate that Australia has experienced over the past two years, we are noticing that more and more of our real estate agent clients are reporting bad experiences with vendors whereby the vendors either ignore their obligation to pay a real estate agent commission, or in the alternative, bargain with a real estate agent after a property has been sold in order to strike a new deal.

Obviously real estate agents should be diligent when it comes to preparing the Exclusive Authority (Authority) to sell a property and should ensure that the Authority complies with all legal requirements so as to not create any unnecessary roadblocks for the recovery of commission. This will make it difficult for a vendor to dodge their legal obligation to pay commission.

One pattern of behaviour that we at MST have noticed over recent months has involved vendors purporting to terminate an Authority and then selling a property after that Authority has been terminated.  There is Court authority which supports the proposition that in all of the circumstances, if a real estate agent does not notify a vendor that certain obligations with respect to commission will continue irrespective of the fact that the Authority has been prima facie terminated, then a real estate agent will not be in a position to recover commission in circumstances where a vendor may sell the property to a person that was introduced to the vendor by the real estate agent.

Taking all of the above into account, MST has introduced a new package designed to assist real estate agents when it comes to the recovery of commissions.

As a complimentary service to MST’s real estate clients we will issue a letter of demand to vendors for outstanding advertising expenses, marketing expenses and commissions.  If the recovery of fees proceeds to litigation we will act on your behalf for a fixed fee of $5500 for the following:

  • Issue of court proceedings for recovery in the Magistrates’ Court
  • Request for Particulars and Discovery
  • Representation at an arbitration (if claim is for less than $10,000)
  • Representation at mediation (if claim is more than $20,000)

We recommend this offer as one that will be cost effective for agents for the purposes of commission recoveries.

If we can assist you, or you have any questions, with respect to any commission recovery matters, please do not hesitate to contact one of our Real Estate lawyers to discuss.

Author:  Mark Skermer