Agency Agreements

For an agent to be in a position to claim their commission
they must, by law, have a valid Agency Agreement.

For a valid Agency Agreement to exist, the agent must meet the following requirements:

• It must be in writing and signed by, or on behalf of, the licensee of the real estate office (‘licensee’) and the person on whose behalf the services are to be performed (‘vendor’).
• A copy of the Agency Agreement signed by the licensee must be served by the licensee on the vendor within 48 hours after the agreement was signed by, or on behalf of, that person.
• The Agency Agreement must contain the terms as prescribed by the Property, Stock & Business Agents Act 2002.
• The Property, Stock & Business Agents Regulations 2003 (PSBAR) set out in Schedules 7 and 8 all of the specific requirements for inclusion in the Agency Agreement.
• The agent is also required under the PSBAR to conduct a preliminary physical inspection of the property and deliver a sales inspection report containing detailed particulars about the property to the vendor.

If all these steps are followed, then a valid Agency Agreement is in existence and the agent will be able to claim commission from the sale of the property.

There are other issues that may arise that a vendor needs to be aware of, including making sure that any disbursements which may be part in addition to the commission is set out and shown, including marketing.

A common practice now for real estate agents is for a clause to be placed in the Agency Agreement stating that even if the purchaser defaults on the purchase of the property and the vendor is able to keep the deposit but is left with the property, the agent is still able to claim their full commission.

As with any other document an Agency Agreement should be read carefully to ensure that the client/vendor does not have any hidden surprises.

For further information, please contact our Conveyancing Team.