Which real estate agent is entitled to the commission?
Dec 06, 2016Shire Legal acted for a client purchasing a property at Burraneer through a local real estate agent. The client had first seen the property 12 months prior when he was not seriously in the market to purchase. It was not until 12 months later that he was ready to buy, and at that stage, the vendor had briefed another agent to sell the property.
During the course of the conveyancing matter, the first agent contacted Shire Legal with a claim that our client was first introduced to the property via the first agent, and therefore the first agent was entitled to a cut of the commission. We effectively refuted the first agent's claims by establishing that the first agent was not the "effective cause" in our client's purchase of the property.
The legal position is that a real estate agent is entitled to commission on the sale of a property if that agent is the "effective cause of the sale" of the property, whether during or after the period of exclusive or open agency. Courts have taken the view that the real question is whether the actions of the agent really brought about the relationship of buyer and seller.
As noted in the 2001 High Court case of Moneywood Pty Ltd v Salamon Nominees Pty Ltd (at paragraph 86):
"Questions respecting the sufficiency of a causal connection usually will arise ... where the question is whether the agent introduced to the principal the party who eventually purchased the land; or where the question is whether the intention of the purchaser to purchase the land was brought about by the actions of the agent ... the essential issue is whether the agent brought about a state of affairs giving rise to the contractual right to the commission."
To avoid any possible disputes, it is imperative to include a special condition in the Contract by which the purchaser warrants that they were introduced to the property only by the agent noted on the front page.
Contact Shire Legal if require assistance with the sale of your property.
Contact the Shire Legal team if you have any questions.
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