Real estate agency agreements – protecting your agency, and your agents

Real estate agency agreements – protecting your agency, and your agents

1 March 2021

Clients often try to bypass agents after using their services – this is unacceptable.

The newly enacted act introduces a license for property agents, brokers and consultants. The Real Estate Licensing Board will now work to maintain a level of ethical and diligent behaviour for licensed professionals.

The act also offers a degree of protection to licensed professionals – allowing for fair compensation. Fair compensation is not enough to protect real estate professionals.

This is where AE steps in. How do we help?

By minimising these instances

Article 12 of the Act requires licensed agents and brokers to inform clients of their fees in advance. An agreement between the agency and its clients, generally referred to as a mandate, is now quintessential. If the agency does not establish its rates, the brokerage fees found in the Civil Code apply. This is far from ideal.

AE has already helped many agencies to create a new agency agreement that is clear, robust and sets a due date and key milestones for when the agency fee becomes due, in part or in full. A well-written contract protects property professionals at every turn.

Signing a written agreement creates a contractual relationship between the agency and clients. The contract rules out common abuse strategies in writing since paying the due fees becomes a contractual obligation.

Through decisive and effective court action

The agreement is also essential when the agency files for remedial court action. In the court action, the agency can claim a breach of a contractual relationship – which is far easier to prove than a claim for compensation based on the law. .

Agencies with a signed contract are in a much stronger position to recover the full agency fee. Without one, the court would have to decide what compensation the agency will receive on a case-by-case basis.

Although licensing property professionals is a step in the right direction – it is not enough. Agencies need to make use of clear contracts which prevent clients from avoiding due payment. Agencies should also send a clear message when a client doesn’t fulfil their obligations – through swift court action.

For too long, agencies have tolerated clients bypassing them after using their services. At AE, we believe that this should no longer happen. Our team of legal experts are here to draft comprehensive contracts and, when necessary, to enforce those contracts in court.

Contact us today to protect your agency and your consultants!