EAA Publications
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| The Freshman |
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| The agent's commission should
be specified in writing to avoid subsequent disputes |
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 In
negotiating the price of a property, the purchaser or the vendor
sometimes asks the estate agent to reduce his commission. Sometimes
the agent, in order to facilitate the deal, volunteers to reduce
the commission. The following is a case of dispute arising from
the reduction of commission.
In the estate agency agreement between a purchaser, Mr Lee,
and the estate agent, it was provided that the commission shall
be 1% of the transacted price. When signing the provisional
agreement for sale and purchase with the vendor, Mr Lee asked
the agent to reduce the commission from 1% to 0.5%. The agent
agreed, but said that as he would honour his promise there was
no need to amend the original estate agency agreement. Mr Lee
did not insist. After the transaction had been concluded, Mr
Lee received an invoice from the estate agency for the commission
of 1% of the price, which differed from the oral agreement.
Mr Lee tried at once to contact the agent but the agent had
left the company. Meanwhile, the estate agency company denied
having promised to reduce the commission. Mr Lee refused to
pay. The agency then instituted proceedings against Mr Lee for
recovery of commission, putting Mr Lee to a lot of hassles.
Subsequently, as Mr Lee did not appear in court, the court ruled
in favour of the agency.
The main point of the case is that Mr Lee did not insist on
putting down in writing the agreement to reduce commission.
Although an oral agreement is legally binding, it would be difficult
to verify such an agreement in the absence of any documentary
evidence or witness. Mr Lee also made a mistake in failing to
appear in court, thereby completely forfeiting his right to
defend himself.
In fact, it is no trouble at all to amend the provisions for
commission in the estate agency agreement. One only has to cross
out the original parts, fill in the amended amount or rate,
and initial against the amendment. It can also be done by putting
down on a separate piece of paper the parties' names, the address
of the property, the amended commission, and the parties signing
thereon.
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