Appointing a real estate agent?

Plenty of people are in the current market, and in doing that they sign an appointment to act. But before doing so it is important to check the terms of the appointment.

Under Queensland’s Property Occupations Act, agents have to have a written appointment before performing services for the seller, in the absence of which they may lose their entitlement to commission.

The form of appointment is Property Occupations Act Form 6 which is a form available from the Queensland Government website.

The form provides for the appointment to be one of a listing for a particular service, an open listing (other agents can be appointed), a sole agency (the appointed agent is the only agent but the seller can sell), or an exclusive agency (the agent is the only agent and is paid commission even if the seller sells). It is important to know what sort of appointment is proposed, and what the consequences are. For agents, the holy grail is an exclusive agency with or without an auction, and generally after the exclusive agency ends the appointment will provide for an open listing.

Many any agents add terms to the form which are also signed by their clients. Most often those terms are in a form produced by the Real Estate Institute of Queensland, and called “Essential Terms and Conditions”. Those terms and conditions contain a number of provisions for the benefit of the agent and which should be examined by sellers and possibly deleted. As examples, the terms:

(a) require the owner to pay commission if the contract is terminated due to the default of the seller (eg if the mortgagee will not release);

(b) require the owner to pay commission if the contract fails and all or part of the deposit is liable to be forfeited – even if that is less than the commission;

(c) require the owner to pay commission if the contract is terminated by mutual agreement – even if the buyer clearly cannot settle;

(d) contain warranties as to the condition of the premises and indemnities in favour of the agent from claims in certain circumstances, even if the owner is not at fault.

These sorts of forms are often signed without the owner reading them carefully or understanding the risks, and often without the owner appreciating that certain provisions can – and should – be removed.

For advice concerning appointments, please contact Peter Muller at peterm@qbmlaw.com.au.