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Litigation – Exclusive Sales Authorities

Published by Gaven Livermore on

When selling a house, being offered an exclusive sales authority by your real estate agent is, to most vendors, something that seems like a good idea. However, recent case law should at the very least cause vendors to read the authority carefully before signing it.

Next month the Supreme Court of Victoria will hand down its decision in a case involving an elderly litigant who is seeking an order from the Court to prevent a real estate agent from collecting a large commission on the sale of her home on the basis that the agent used a non-compliant exclusive sales authority. The authority forms have for some years been sold to agents by the Real Estate Institute of Victoria. The forms were approved by Consumer Affairs Victoria.

Last month, in Advisory Services Pty Ltd (trading as Ray White St Albans) v Augustin & Anor [2018] VSCA 95, the Court of Appeal upheld a decision of the County Court that the agent was not entitled to the commission claimed because it had used an exclusive sales commission form that did not comply with section 49A of the Estate Agents Act (Vic) 1980.

Section 49A provides, among other things:

(1) An estate agent must not obtain, or seek to obtain, any payment from a person in respect of work done by, or on behalf of, the agent or in respect of any outgoings incurred by the agent unless—
(a) the agent holds a written engagement or appointment that is signed by the person (or the person’s representative); and
(b) before obtaining the person’s signature to the engagement or appointment, the agent (or an agents’ representative employed by the agent) informed the person (or the person’s agent or representative) that the commission to be paid to the agent under the engagement or appointment and any money to be paid by the person in respect of outgoings were subject to negotiation; and
(c) the engagement or appointment contains—
(i) details of the commission and outgoings that have been agreed; and
(ii) if a fee is to be calculated on a percentage basis, a statement of that fee expressed as both a percentage and as the dollar amount that would be payable on the reserve price or any other relevant amount set out in the engagement or appointment; and
S. 49A(1)(c)(iii).

Prospective vendors should carefully read such sales commission forms before entering into agreement to sell real property or before engaging a real estate agent. If unsure, it is best to seek legal advice in relation to authorities for agency.

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