Real Estate Commission Disputes in Queensland

Real estate commission disputes are not uncommon in Queensland, particularly when multiple agents are involved in a sale or when sellers challenge the validity of commission claims. These disputes often arise due to the structure of commission agreements, the effectiveness of agents in securing sales, and compliance with legal requirements, such as the proper use of Form 6.

This article explores the multifaceted nature of these disputes, including key legal principles, common scenarios that lead to disagreements, and relevant case studies that provide insight into how Queensland courts address these matters.

Key Factors in Real Estate Commission Disputes

1. Commission Structure in Queensland

In most transactions, the commission rate is specified in the Form 6 appointment signed by the seller. While the commission is typically a percentage of the sale price, more complex arrangements can be made, such as agreements where a higher percentage is applied if the sale price exceeds a certain amount (e.g., exceeding $10 million). The structure of the commission is central to most disputes, as it governs the agent’s entitlement to payment.

2. Exclusive Appointments

An exclusive appointment is a common arrangement in Queensland where a seller appoints a single agent to handle the sale of the property. Under this arrangement, the seller is generally liable to pay commission to the agent if a sale occurs during the exclusive agency period, even if the sale is made by the seller or another party. Disputes often arise when the seller challenges whether the agent was the effective cause of the sale.

3. Commission After Expiry of Appointment

Even after the exclusive agency period has expired, an agent may still be entitled to commission if they were the effective cause of the sale. This occurs when the agent introduces a buyer who eventually purchases the property after the agency period ends. Courts in Queensland have upheld agents' claims for commission in such cases, provided they can prove that their efforts directly contributed to the sale.

4. Commission on Terminated Contracts

The standard terms in most Queensland agency appointments require sellers to pay commission even if the sale contract is terminated. This means that if the buyer defaults and the deposit is forfeited in favor of the seller, the agent is typically entitled to claim a portion of that deposit. However, sellers can request that these clauses be removed from the Form 6 appointment before signing.

5. Form 6 Invalidity

An agent may be prevented from recovering commission if there is an invalidity in the Form 6 appointment. This can happen if the form was improperly completed or if the agent was not appropriately appointed, leading to disputes over the legitimacy of the agent’s commission claim.

Case Studies: Real Estate Commission Disputes in Queensland

Exploring real-world cases provides valuable insight into the legal principles and financial implications involved in commission disputes. Below are six notable cases from Queensland:

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 $1.9 million and $2 million.
• Dispute: After the agency’s exclusive period ended, another agent closed the sale at $1.752 million. The first agency claimed commission as the "effective cause of sale."
• Outcome: Initially, the court awarded the commission to the first agency. However, on appeal, the decision was reversed, highlighting the importance of the second agent’s role in finalizing the sale.
  Learn more here.

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 $12 million property. A subsequent contract for $7.5 million was signed but later terminated.
• Dispute: The agency claimed $1.65 million in commission despite the contract termination.
• Outcome: The court upheld the agency’s claim, ruling that the terms of the agreement entitled the agent to commission, regardless of the sale's failure to finalize.
  Learn more here.

Case Study 3: Unlicensed Agent Wins Commission

Unlicensed Agent Wins "Boozy Lunch" Site Introduction Commissions

• Background: A property consultant recovered $1.2 million in commissions for introducing early learning centres, despite not holding a real estate license.
• Dispute: The agency challenged the consultant’s entitlement, citing his unlicensed status.
• Outcome: The NSW Supreme Court ruled in favor of the consultant, validating the agreement reached at an informal social event.
  Learn more here.

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 failed to secure commission due to using an outdated Form 6.
• Dispute: The agent claimed commission but was denied due to the use of an invalid form.
• Outcome: The Queensland Civil and Administrative Tribunal (QCAT) ordered the agent to repay the commission, emphasizing the importance of using valid, up-to-date forms.
  Learn more here.

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 dismissed by the sellers for poor marketing efforts but later sued for commission when another agent completed the sale.
• Dispute: The sellers argued that the agency had failed in its marketing duties.
• Outcome: QCAT ruled in favor of the agent, awarding $25,000 in commission, plus interest and filing fees.
  Learn more here.

Case Study 6: Extraordinary Commission on Unit Site Sale

Agents Reach for $12mil Carrot! Court Upholds "Extraordinary" 50% Commission on Unit Site Sale

• Background: A $24 million development site sale included an agreement for a 50% commission.
• Dispute: The seller contested the commission as unconscionable.
• Outcome: The court upheld the agreement, allowing the agent to claim $13.2 million in commission.
  Learn more here.

Additional Resources for Real Estate Commission Disputes

To better understand the legal guidelines and dispute resolution processes, here are key resources:

• Property Occupations Act of Queensland: Provides the legal framework for real estate transactions and agent obligations.
• Queensland Civil and Administrative Tribunal (QCAT): Offers guidance on how commission disputes are resolved and the tribunal’s jurisdiction.
• Professional Real Estate Bodies: Industry associations that offer ongoing training and resources to ensure agents comply with current standards and practices.

Conclusion

Real estate commission disputes in Queensland can arise from a variety of situations, including competing claims by multiple agents, termination of contracts, and issues with the validity of Form 6. By understanding the relevant legal principles and reviewing past case studies, stakeholders can navigate these disputes more effectively. It is critical that both agents and sellers ensure that commission agreements are clear, legally compliant, and understood by all parties to avoid costly and time-consuming disputes.