Agreement tackles double commission conundrum

Real estate agencies are being encouraged to use a set of new clauses in residential agreements that minimise the possibility of vendors being liable for double commissions.

Wednesday, November 5th 2014, 12:00AM

by The Landlord

The Real Estate Institute and Real Estate Agents Authority are jointly recommending the clauses be taken up. They also reduce the potential for disputes between agents.

The REINZ said practices to manage the issues had been in place informally in parts of New Zealand over many years but were not consistent nationwide.

Double commission situations can arise when a vendor changes to a new agent after signing an agreement with another.

The vendor can potentially still be liable for a commission to the first agent if the buyer of the property is someone who was introduced by that agent.

The REINZ said had been concerned for some time about the potential for disputes between agents about which agency was entitled to the commission and for the jeopardy arising for vendors if the situation could not be resolved.

REAA and REINZ had agreed on the new clauses to replace the “introduction clauses” in the listing agreements. The new-style agreement has been published “REINZ Agency Agreement First Edition 2014”.

Adoption of the clauses is still voluntary.

REINZ chief executive Helen O’Sullivan said: “This is an issue of common interest for home owners and the real estate industry which we as a responsible member organisation have set out to resolve with the support of the REEAA. We believe the wide adoption of these new clauses will be beneficial for vendors and the real estate industry by increasing confidence and understanding between the parties.”

If vendors use more than one agency to sell their property, the new clauses entitle the agent to claim commission only if the agreement is signed during the agency period.

The agent’s entitlement to commission will continue for six months after the end of the period only in the event of a private sale.

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