While some of Australia’s markets are firing on all cylinders, many are not, meaning properties can languish on the market for much longer than the standard agent appointment lasts.
If a property doesn’t sell, often the vendor will choose to go with another agent, who may end up securing a sale.
Sometimes this buyer has already had dealings with the first agent, as well as the second but does that mean they’re entitled to the commission, too?
“There is a plethora of case law dealing with agents’ entitlement to commission in circumstances where they have introduced a buyer to a property, who subsequently purchases the property after the agent’s appointment has expired,” Carter Newell Lawyers partner Michael Gapes said.
“The cases demonstrate that the agent will have to establish a causal connection between their introduction of the buyer to the property and the ultimate sale of the property.”
Gapes said that it is clear that by merely introducing a buyer to a property, an agent will not necessarily be considered to be the effective cause of any sale which may eventuate.
He said an agent would have to have a number of other strings to their sales bow to prove their initial efforts helped bring about a sale.
“In order to successfully recover their commission, an agent will have to have a valid appointment in place and also be able to demonstrate that their input actually brought about the execution of a contract of sale,” he said.
“As well as establishing a causal relationship between the introduction [to] and ultimate sale of the property, agents should ensure they keep adequate records such as activity reports, task files, file notes of meetings and telephone conversations, emails and letters and ensure that these documents can be read or reproduced, if necessary, to evidence their role in the sale of the property.”
Tim O’Dwyer of Mitchells Solicitors believes the law needs to change to better reflect the reality of a sales campaign that involves two agents.
O’Dwyer said those situations can become complex for vendors and has represented clients in the past who were potentially liable for two commissions because the buyer had had dealings with two different agents.
Often the vendor does not read the fine print of the agent’s appointment to act, he said, which can include provisions for the payment of commission regardless of whether the agent still has the listing.
“Part of the problem that I try to resolve when I act for sellers, when they’re listing a property, I say, ‘This is a serious document that you’re signing with the agent, let us look at it first’,” O’Dwyer said.
“We put a clause in that says that the agent has to give the seller details of all persons introduced to the property during their listing period. That way, if the listing runs out and you’re going with another agent, you’ve got a list of names that you can give to the second agent … and say ‘if one these buyers come back, you’re going to have to do a conjunction with the first agent’.”
Two agents claiming commission on one property usually comes about when the first agent sees the sales data listed on online property data resources and recognises the buyer as someone that they introduced to the property.
O’Dwyer said sellers often do not know that a buyer was previously introduced to the property by a different agent and the law should be amended to protect consumers from the threat of a double commission payment.
“The law allows for this and it shouldn’t. There should be a law right across Australia that says one sale, one commission only,” he said.