Don’t draw a blank on commissions

2017-03

WHEN arranging for clients to sign a provisional agreement for sale and purchase of a property, estate agents should not leave essential terms blank – such as the total amount of commission payable by the purchaser and/or the vendor. Otherwise, they may be subject to disciplinary action by the Estate Agents Authority.

A salesman was appointed as a dual agent in a property transaction.

Telling the prospective purchaser that he would not charge him any commission, the salesman then arranged for the purchaser to sign the PASP with the commission to be paid left blank.

Later, the purchaser was reminded by his firm of solicitors to pay the commission to the estate agency.

According to the copy of the PASP provided by the estate agency to the purchaser’s legal representative, the amount of commission to be paid by the purchaser was HK$28,000.

The purchaser refused to pay the commission because of the salesman’s earlier offer.

However, the salesman refused to release the keys of the property to the purchaser unless the latter paid the commission. The purchaser eventually paid the commission and later lodged a complaint with the EAA.

The EAA disciplinary committee was of the view that, by arranging for the purchaser to sign a provisional agreement while leaving blank the total amount of commission to be paid by the purchaser, the agent was in breach of the guidelines of Practice Circular (No 13-06(CR)) issued by the authority.

He had failed to comply with paragraph 3.2.1 of the Code of Ethics which states that “estate agents and salespersons should be fully conversant with the EAO, its subsidiary legislation, this code of ethics, and other guidelines issued by the EAA from time to time.”

The committee reprimanded the agent and attached a condition to his license, requiring him to acquire 12 points in the core subjects under the Continuing Professional Development Scheme within 12 months.