From The Times
June 20, 2008
Brief encounter: Does an estate agent get paid - whatever happens?By Mark Loveday
Q I recently instructed an estate agent to sell my property. The conditions say that I am liable to pay 1.5per cent commission if the agents introduce a buyer who is “ready willing and able” to purchase even if I “subsequently withdraw from the sale” for any reason. I don't quite understand how long these terms apply. If I just decide to withdraw my property from the market for no reason other than changing my mind, can I do that or will I still be liable to pay commission? And if I find a private buyer, will I still have to pay the agent?
A The circumstances in which an estate agent is paid commission will vary according to the precise terms in the agreement. As every estate agent uses slightly different wording, it is sometimes quite hard to say whether commission is payable or not.
The basic rule is that commission is paid only where there is a completed sale of the property, not where the agent merely introduces a potential buyer. However, estate agents often try to say in their terms and conditions that they will be paid if there is a buyer “ready willing and able” to exchange contracts at a certain price. If there is such a term, you may have to pay commission if you unilaterally decide to back out after a buyer makes a firm and unqualified offer.
It is quite common for disputes to arise about whether the agent gets paid for a sale after its agency is over. The issue was dealt with very recently by the Court of Appeal in the case of Foxtons Ltd v Pelkey Bicknell. In that case, the agent showed a potential buyer around a house in Twickenham in July 2005. The potential buyer later viewed the property through another agent in October 2005 and eventually bought the house for £1.1 million. The court decided that Foxtons should not get any commission. Although it had first introduced the buyer to the property, Foxtons had not been the “effective cause” of the sale itself.
An agent therefore generally will not be able to claim commission if you find a buyer privately or someone comes back long after the agreement is over and makes a successful offer for the property.
The writer is a barrister at Tanfield Chambers. E-mail your questions to: property.consumer@thetimes.co.uk
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