We have previously considered the issue of the importance of real estate agents properly completing their PAMD Form 22a’s:-
Entitlement to Commission – Are you the effective cause of the Sale?
Make sure you complete your PAMD Form 22a – Your commission may depend upon it!
Another area that is often overlooked is the right to Commission where a Contract is terminated either through the wilful default of the purchaser, by mutual agreement or where it is terminated within the cooling off period.
The Schedule document which is issued by the REIQ accounts for pages 5-9 inclusive of the PAMD Form 22a. Importantly, the suggested Schedule and form from the REIQ is not a prescribed form under the PAMDA legislation or regulations. However, if real estate agents wish to protect their right to commission in the event of a Contract falling over for whatever reason, it is very important that they attach the REIQ Schedule and have the sellers initial each page of the document. Pages 8 and 9 of the REIQ Schedule set out terms and conditions of the appointment of the agent and the agent’s entitlement to commission. It also sets out the agent’s entitlement to commission in the event of the Contract being terminated for whatever reason (this usually results in the deposit being forfeited to the sellers and, if this form is not completed, the agent may miss out on their entitlement to commission which is usually payable from the deposit monies).
There has been judicial authority that states that failing to annex the REIQ Schedule (and in particular pages 8 and 9 of same) is not fatal to a claim for commission – see the decision of Decker -v- Anderson and Griffiths  QDC 283. However, that case was not specifically on point with respect to an agent claiming commission in the event of a Contract being terminated or rescinded by mutual agreement. The provisions of pages 8 and 9 of the REIQ Schedule specifically provide the agent with the contractual terms to ground a claim for commission in the various circumstances set out in paragraphs 2 and 12.
It is important to note the agent’s entitlement to a termination penalty under clause 12 of the terms and conditions. This entitles the agent to a 50% share of the termination penalty in the event that the purchaser pulls out of the Contract in accordance with the cooling off provisions.
Of more importance to the agent, however, are the entitlements set out under paragraph 2.1:
- The client defaults under the Contract of Sale and that Contract is terminated by reason of or following that default; or
- The Contract of Sale is not completed and the whole or part of the deposit paid is liable to be forfeited; or
- The Contract of Sale is terminated by mutual agreement of the client and the buyer.
In these difficult economic times when the market is clearly in the doldrums, it is extremely important that real estate agents do whatever is necessary to preserve their claim for commission in the event that a Contract is terminated. This is particularly relevant in this market when there are a large number of Contracts that are being terminated for various reasons. Make sure you annex the REIQ Schedule and have the client initial all 9 pages!
If you have any questions or queries in relation to any commission disputes or any other issues, please do not hesitate to contact Christine Martin, our Property & Commercial Department Manager on 07 5506 8245 or [email protected].