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We all expect payment for a hard day’s work. But, if you are a property agent, it’s not always that simple.

Timing can be everything. There will be numerous times when an agent, acting in good faith and in the interest of securing the best commercial outcome for clients may start work and incur substantial costs prior to obtaining a “formal” engagement.

Under the Property Occupations Act, a person must not act as a property agent and perform any services for a client unless the client first appoints the property agent on the prescribed Form 6.  A failure to comply not only incurs a penalty of up to $25,230 but also results in loss of entitlement to any commission or reward for performance of the service.

We see many agents sending the prescribed Form 6 to be signed by the seller or landlord client at the same time the relevant Contract of Sale or tenancy agreement that the agent has negotiated on behalf of the client is being signed. This is too late and the agent will not legally be entitled to claim any commission as the service has already been performed at this point.

While this may seem unfair there are a series of cases, including current Court action in our offices, and under both the old Property Agents and Motor Dealers Act and the Property Occupations Act where agents have missed out on commission for failure to strictly comply with the requirements of obtaining appointments to act.

In addition to the mandatory and prescriptive engagement requirements, agents need to be mindful that without a proper engagement, he or she risks not only breach of the law and loss of entitlement to commission but also:

  • being personally liable as his or her public liability and professional indemnity insurances may not extend to an agent who is not properly retained; and
  • prosecuted for trespassing; and
  • without the benefit of any other limitation of liability clauses or provisions that benefit the agent generally incorporated in the standard appointment.

At Macpherson Kelley, we have experienced legal industry professionals who can assist property agents to:

  1. review the agency’s current practice and identify area for improvements;
  2. develop best practice to comply with current legislation; and
  3. improve risk mitigation procedures.

For more information, please contact our Property and Construction team.

This article was written by Cathy Russo, Principal Lawyer – Property and Construction and Eddie Leong, Senior Associate – Property and Construction. 

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Agent Entitlements: not always that simple

23 January 2018
cathy russo eddie leong

We all expect payment for a hard day’s work. But, if you are a property agent, it’s not always that simple.

Timing can be everything. There will be numerous times when an agent, acting in good faith and in the interest of securing the best commercial outcome for clients may start work and incur substantial costs prior to obtaining a “formal” engagement.

Under the Property Occupations Act, a person must not act as a property agent and perform any services for a client unless the client first appoints the property agent on the prescribed Form 6.  A failure to comply not only incurs a penalty of up to $25,230 but also results in loss of entitlement to any commission or reward for performance of the service.

We see many agents sending the prescribed Form 6 to be signed by the seller or landlord client at the same time the relevant Contract of Sale or tenancy agreement that the agent has negotiated on behalf of the client is being signed. This is too late and the agent will not legally be entitled to claim any commission as the service has already been performed at this point.

While this may seem unfair there are a series of cases, including current Court action in our offices, and under both the old Property Agents and Motor Dealers Act and the Property Occupations Act where agents have missed out on commission for failure to strictly comply with the requirements of obtaining appointments to act.

In addition to the mandatory and prescriptive engagement requirements, agents need to be mindful that without a proper engagement, he or she risks not only breach of the law and loss of entitlement to commission but also:

  • being personally liable as his or her public liability and professional indemnity insurances may not extend to an agent who is not properly retained; and
  • prosecuted for trespassing; and
  • without the benefit of any other limitation of liability clauses or provisions that benefit the agent generally incorporated in the standard appointment.

At Macpherson Kelley, we have experienced legal industry professionals who can assist property agents to:

  1. review the agency’s current practice and identify area for improvements;
  2. develop best practice to comply with current legislation; and
  3. improve risk mitigation procedures.

For more information, please contact our Property and Construction team.

This article was written by Cathy Russo, Principal Lawyer – Property and Construction and Eddie Leong, Senior Associate – Property and Construction.