Real estate commission disputes in – between agents and between agents and sellers – frequently occur in Queensland.
Here we explore the multifaceted nature of these disputes.
Understanding Real Estate Commissions in Queensland
Real estate commission disputes in Queensland often stem from complexities inherent in commission structures and regulatory environments.
- Commission Structure: most commission arrangements are routine with the rate of commission specified in the Form 6 appointment signed by the seller.
- Commission negotiation: sellers are entitled to negotiate their preferred rate of commission with the seller. The commission is most often a percentage of the actual sale price. They can however be formulated in a more exotic fashion e.g., “the whole of the sale price exceeds $10 million”.
- Exclusive appointments: if the appointment is “exclusive”, the seller is liable to pay the agent a commission regardless of who affects the sale if such sale occurs during the exclusive agency period.
- Commission where sale occurs after agent’s appointment has expired: if an agent has been “effective cause of the sale” they may be entitled to the commission you’ve and if the sale occurs through a different agency at a later date after the period of their agency has expired. This might occur if they introduce a prospect to the property and present a contract for them to sign but they don’t sign up until a later date.
- Commission when contract is terminated: the standard terms of Queensland agency appointments require payment of commission to the agent even if the sale is terminated. This means that an agent will get first crack at the deposit if it is forfeited in favour of the seller. Agents will agree to delete these clauses if the seller requests prior to signing the Form 6 appointment.
- Form 6 invalidity: An agent may be prevented from recovering commission if there is some invalidity in the Form 6 appointment.
Delving into specific Queensland case studies offers a deeper understanding of the financial implications and legal nuances in real estate commission disputes.
Case Study 1: Buyer Introduction and Commission Claim
Agency Gets Buyer On Paper, Trumped On Commission Claim By Competitor’s Closing “skill Set”
- Background: A Gold Coast agency introduced a buyer for a property priced between $1.9m and $2m.
- Dispute: The agency’s exclusive period ended, but they claimed commission as the “effective cause of sale” after the property was sold for $1.752m through another agent.
- Outcome: The court initially awarded the commission to the first agency but, on appeal, the decision was reversed, emphasizing the new agent’s critical role in closing the deal.
Case Study 2: Commission on Terminated Contract
Form Fight: Seller To Pay Agent 20% Commission On Terminated Contract
- Background: Andersons Real Estate was appointed to sell a $12m property, later agreeing to a lower $7.5m sale with a different buyer.
- Dispute: The agency claimed a $1.65m commission despite the sale’s termination and a new contract with a related entity.
- Court Ruling: The court upheld the agency’s claim for commission, emphasizing that the commission was due per the agreement terms, despite the sale not finalizing.
Case Study 3: Unlicensed Agent Wins Commission
Unlicensed Agent Wins “boozy Lunch” Site Introduction Commissions
- Background: A property consultant, Hilton Headley, recovered $1.2 million in site introduction commissions for sourcing early learning centres.
- Dispute: Despite not holding a real estate license, Headley’s connections and agreements were deemed valid.
- Outcome: The NSW Supreme Court ruled in favor of Headley, acknowledging the agreement reached at a social gathering and rejecting the claim that he acted as an unlicensed real estate agent.
Case Study 4: Agent Stripped of Commission Due to Paperwork Error
Agent Stripped Of $8k Commission Due To Paperwork Error
- Background: An agent introduced buyers for a property but was later denied commission due to an outdated appointment form.
- Dispute: The agent, using an obsolete form, claimed commission for a successful sale.
- Outcome: QCAT ordered the agent to repay the commission, emphasizing the need for compliance with current legal forms and standards.
Case Study 5: Exclusive Agent Fired, Sues for Commission
Exclusive Agent Fired For Poor Marketing, Agent Sues For Commission
- Background: Ray White Surfers Paradise was enlisted to sell a property, but the sellers terminated the exclusive agency, citing poor marketing.
- Dispute: The agency sued for commission after the property was sold by another agent.
- Outcome: QCAT ruled in favour of the agency, ordering the sellers to pay $25k in commission, the tribunal’s maximum jurisdiction, plus interest and filing fees.
Case Study 6: Extraordinary Commission on Unit Site Sale
Agents Reach For $12mil Carrot! Court Upholds “extraordinary” 50% Comm On Unit Site Sale
- Background: A $24 million sale of a development site involved a 50% commission agreement.
- Dispute: The seller contested the commission as unconscionable.
- Outcome: The court dismissed the seller’s claims and upheld the extraordinary commission agreement, allowing the agent to keep their $13.2 million commission
These cases highlight the varied scenarios that can lead to commission disputes in the Queensland real estate market and underscore the importance of clear terms, adherence to legal requirements, and accurate representations in commission agreements.
- Property Occupations Act of Queensland: For legal guidelines and regulations.
- Queensland Civil and Administrative Tribunal (QCAT) Guidelines: For understanding the dispute resolution process.
- Professional Real Estate Bodies: For ongoing training, resources, and updates in industry standards and practices.
This comprehensive approach will equip stakeholders in the Queensland real estate market with the necessary tools and knowledge to handle commission disputes effectively and fairly.