Clause 11.0 of the standard Agreement for Sale and Purchase of Real Estate states that if an agent is stated on the front page of the Agreement, this is evidence that the sale has been made through the agent. Therefore the Vendor shall pay the agent's charges, including GST, for affecting such sale.
What happens if the agent's name is not on the Agreement?
Section 62 of the Real Estate Agents Act 1976 states that no person shall be entitled to recover any commission as a real estate agent unless their appointment to act as an agent is in writing and is signed , before or after the sale has been completed.
If you have not signed a Listing Agreement with a Real Estate Agent nor does the Agreement for Sale and Purchase of the Property name an Estate Agent you may still be required to pay commission to the Agent if the Agent introduced the Purchaser to the property.
In Nathans Commercial Real Estate v Pacer Kerridge Corp , the Court held that if an Agent had found a purchaser who was willing and able to buy and the Agent's introduction was the effective cause of the sale, then the Agent had a right to a commission on that sale. In essence what this means is that if an Agent brings a buyer through your property and you show no interest in that buyer at the time but later contact him and draft a private Agreement you still have to pay commission to the Agent who introduced the Purchaser.
The Court also took this a step further by holding that even if an initial offer was refused by the vendor but through subsequent negotiations, without the assistance of the Agent or the agent's knowledge, a sale took place, the Agent is still entitled to commission on the sale. In summary it is the Agent's introduction of the buyer to the property that establishes the Agent's right to commission.
Even if it can be clearly shown that the agent had absolutely no involvement with the buyer, you may find that you are still liable to pay agent's costs in respect of any advertising made on your behalf as the Vendor of the property.
If for any reason you are unsure whether you should be paying real estate commission, please contact one of Preston Russell Law's property team who will be more than happy to assist you.
