One Sale - Two Commissions

Published 27 June 08 07:00 AM | Peter Mericka 

by Tim O'Dwyer M.A., LL.B
Solicitor
Consumer Advocate
watchdog@argonautlegal.com.au

 

Carly Gillard was staggered, after settling the sale of her Northern New South Wales property, to find herself facing commission claims from two real estate agencies.  Her property had been listed with both agencies, but only one secured the sale.  She soon filed a claim with the NSW Consumer, Trader and Tenancy Tribunal to determine whether she was liable for two commissions and, if only one, which agency she should pay.

On 15th March 2006 Carly listed with Swann Realty (“Swanns”) under an exclusive agency agreement until 30th April.  While this agreement provided for non-exclusive selling rights from 1st May until the property sold or the agreement was terminated, it also explained how, if another agent sold her property, Carly might have to pay two commissions.  On 1st May, after Swanns’ exclusive agency ended, Carly gave a non-exclusive listing to Dillon Realty (“Dillons”).

On 28th April, Graham and Tracey Chapman, who were in the market to buy, arranged with Swanns to inspect Carly’s property.  But the appointment was cancelled. Another was made, and Chapmans inspected the property on 2nd May when they said they might make an offer. A couple of weeks afterwards Swanns showed them another property.

Chapmans also approached Dillons about properties for sale.  Carly’s was among those shown to Chapmans.  When Chapmans told Dillons they had already inspected it with Swanns, Dillons said this would be OK.  On 16th May Dillons notified Carly that a sale had been negotiated with Chapmans, but failed to mention that Swanns had shown Chapmans the property first.  Contracts were exchanged on 30th May.  After settlement on 14th July, Dillons claimed their commission.  On learning of the sale, Swanns also claimed commission from Carly.

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Filed under: Commission, exclusive sale authority, swann realty, exclusive agency

Comments

# One Sale - Two Commissions | Real Estate Blog said on June 27, 2008 2:39 PM:

PingBack from http://www.australianhousehunters.com.au/blog/2008/06/27/one-sale-two-commissions/

# Trevor said on July 2, 2008 11:34 AM:

This is very interesting. I have Propery in Qld

I had open listing with Agent A,

was taken off market later changed to open listing Agent B,a couple became aware of my home via a neighbour having been aware my home was forsale.  The couple contacted me and I showed the property to the couple twice, so effectively I introduced the clients to the property. As they left they saw Agent B sign thought it was exclusive agency and made offer through Agency B. Contract was extended several time then fell over.  I have new agent C and granted exclusive agency couple have now sold their home and wish to buy. REIQ have advised that I can sell via Agent C and no commission payable to prior Agents. Do you know if there is anything in REIQ real estate appointments which protects sellers from having to pay 2 commissions?

# Glenn Twiddle said on July 18, 2008 12:12 PM:

Hi Trevor,

Your explanation there is a tad unclear but there definitely is something in both the Form 22a terms and conditions, as well as in the Code of Conduct, which is part of the PAMD Act. An agent must protect potential clients from unwittingly entering onto 2 'controlled' listing, meaning exclusive or sole.

So if any agency has broken that section of the Code of Conduct, I would guess (and I'm not a lawyer) that despite any claim they may think they have to commission, after investigation by the CCT (contact office of fair trading for more info), there will be no commission payable to the agent who breached the Code of Conduct. Also, there is a section in the terms and conditions again (if, as you state, you are using an REIQ Form 22a) that states that an agent is entitled to commission only when they are the 'effective cause of sale' so if an agent runs a buyers through the property but fails to produce an offer on it, then at a time outside the first agents period of exclusive agency, another agent runs and sells to the same buyer, the first agent has no claim to commission. (there was a case simliar to this that I can't quote, that found in favour of the second agent's entitlement with the first agent who first ran the buyer but couldn't negotiate a deal, with no entitlement, and thank god the whole 'client being up for two commissions' thing rarely gets enforced).

Bottom line there, is the Commercial and Consumer Tribunal as part of the OFT has the powers of a magistrates court and is there to protect consumers from the errors (intentional, negigent and fraudulent) of real estate agents, especially where there's a breach of the Code of Conduct. Call the OFT for more info or shoot me an email or question to me

glenn@glenntwiddle.com.au

# Tim O'Dwyer said on July 19, 2008 8:24 AM:

Trevor, sorry this reply is a tad slow. You do need professional legal advice on this issue. If you would like me to assist on that basis, please telephone me at my office on 07-32081488. tell reception I'm expecting your call. Regards, Tim O'Dwyer. PS Depending on the end result, you may wish have a report posted here for our readers.