EAA Publications
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| The Freshman |
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| Standard agreements with
prescribed clauses give a high degree of protection |
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There are four types of estate
agency agreements: for use between a vendor and an agent, between
a prospective purchaser and an agent, between a landlord and
an agent, and between a prospective tenant and an agent. Their
contents and formats are prescribed by the EAA to safeguard
the parties' rights and interests in the buying, selling or
leasing of a property.
Last month, Mrs Ma signed an estate agency agreement with an
agency company, to instruct it to list her flat for sale. The
agreement stipulated that if she would enter into a binding
agreement for sale and purchase with a purchaser through the
agent within the validity period, Mrs Ma would pay the agent
1% of the transacted price as commission.
A month later, the flat was sold through this estate agency
company at a price of $2 million. Mrs Ma signed a provisional
agreement for sale and purchase with the purchaser. The purchaser
represented that he had some cash flow problem and preferred
to pay only $10,000 as initial deposit. Mrs Ma thought that
he was sincere and agreed to take this amount, which was smaller
than usual, as initial deposit. At the same time, she paid the
estate agency 1% of the price of the flat, ie, $20,000, as commission.
Before the signing of the formal agreement for sale and purchase,
the purchaser informed Mrs Ma that, for personal reasons, he
would not proceed with the deal. Mrs Ma forfeited the $10,000
deposit, which was less than the commission she paid to the
agent. Fortunately, it was clearly provided in the estate agency
agreement that if completion of the property transaction should
fall through without fault on the part of the vendor, then the
vendor would have no obligation to pay any commission to the
agent. Furthermore, if the commission had been paid, the agent
had to return it as soon as possible. The estate agency returned
the full amount of the commission to Mrs Ma according to the
agreement, which was greatly appreciated by Mrs Ma. Mrs Ma congratulated
herself on signing the estate agency agreement prescribed by
the Authority, thereby enabling her to recover the commission
already paid.
In the past, the terms and conditions in the letters of appointment
and property viewing forms then in use varied and protection
was not comprehensive, giving rise to many disputes. After the
implementation of the new regulations, the use of standard documents
have made property transactions open and fair and will reduce
the number of disputes between estate agents and their clients.
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