Sellinghouse hero
7 November 2014

New clauses tackle commission confusion

Changes provide better protection for consumers.

If you haven't managed to sell your property, changing real estate agents or selling your property privately can lead to legal complications. You may still be obliged to pay your agent a fee, even if you have cancelled the contract. If you engage a new agent, it can lead to a dispute over which agent is owed the commission when the property is sold.

To avoid these kinds of disputes, the Real Estate Agents Authority and the Real Estate Institute of New Zealand have produced standard contractual clauses they would like real estate agents to include in their terms and conditions. Consumers can search for participating agencies on the Authority’s website.

Real Estate Agents Authority chief executive Kevin Lampen-Smith said selling a home was probably the biggest financial transaction most people would ever be involved in.

“It’s an area that can unfortunately lead to disagreements and disputes. We want owners to avoid getting any nasty surprises which could leave them thousands of dollars out of pocket,” Mr Lampen-Smith said.

While these clauses are voluntary the Authority recommends that owners wishing to sell their residential property only employ real estate agencies who include these standard clauses.

A key feature of the standard clauses is that only one agent is eligible to be paid a commission. If a sale and purchase agreement has not been signed during the term of the agent’s contract with the owner, and the agent’s contract with the owner ends, the agent will not be eligible for any commission. This prevents there being any dispute with the new agency if the purchaser was previously introduced.

A copy of the standard clauses and an information sheet on residential agency agreements is available from the Real Estate Agents Authority's website.

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