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13 SEPTEMBER 2010 – AGENTS ENTITLEMENT TO COMMISSION

13 SEPTEMBER 2010 – AGENTS ENTITLEMENT TO COMMISSION

Q.When is a Real Estate Agent entitled to commission?

A. The Property Agents and Motor Dealers Act sets out criteria regarding an agents entitlement to commssion:

  • The agent must be licensed under the Act;
  • If the agent is a corporation they must hold a corporate license under the Act;
  • The agent must be authorised under the license to perform the particular activity eg. the agent must hold a real estate license to sell property;
  • An agent must be properly appointed under the Act ie. an agent must be appointed in writing, in the approved form, prior to the agent undertaking any work for the Seller;

An agents entitlement to commission varies depending on the terms of the agency agreement ie. whether the appointment is an open, sole or exclusive appointment. Under an open listing, an agent must be the effective cause of sale (ie. the agent must bring introduce the Buyer to the Seller) of the property to be entitled to the commission. Under a sole agency an agent is not entitled to commission if the Seller is the effective cause of sale. Under an exclusive agency the agent is entitled to commission if the property is sold during their term of appointment regardless of who sold the property.