Real estate agents fined after commission request

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A Nelson real estate firm, which tried to lay claim to $30,000 on the private sale struck between its property management client and his tenant, has been found guilty of unsatisfactory conduct by the Real Estate Agents Authority.

David Lewis signed a contract with Summit Real Estate to manage his property in January of last year, which included a clause requiring him to pay the firm a 3 per cent (plus GST) commission should he sell the property to his tenant.

Lewis was approached by the tenant to purchase his property later that year, prompting Summit to make an approach for its share of the commission.

Lewis argued the clause in the contract was not brought to his attention when he signed the contract and that it did not suffice as an agency agreement.

Summit said the terms of sale to a tenant were clear and not hidden in the agreement, and that they offered to explain the contract to the complainant's wife, but she declined.

The Real Estate Agents Authority said it sympathised with the complainant in that Summit did no additional work in relation to the sale, other than finding a tenant and managing the property for Lewis.

Summit tried to resolve the dispute by offering to reduce its commission from $30,000 to $12,000 on the sale, but this was rejected by Lewis.

The committee said the agreement breached the Act by "purporting to effect an appointment of an agent without an agency agreement being signed and by attempting to do so without providing the approved agency guide."

The committee fined Summit $2200 and ordered the firm to pay the complainant's legal costs of $4198.98.

While the clause was not hidden in 'small print', it was headed "Property on the Market".

"The Committee does not accept that it is a usual term in a property management agreement that a consumer could expect and for this reason, it would ideally have been brought specifically to the Lewis' attention."

"Given the licensee have said they will no longer seek commission, an order cancelling the claim for commission is not required," the committee said.

"The committee did consider the complainant's submission to order that the clause be removed from existing and future property management agreements and landlords in his position be advised that the agency appointment is unenforceable, but has declined to do so."

- NZ HERALD ONLINE