Commission
- Letting agents charge commission to rent, manage or find tenants on behalf of landlords. This is normally deducted from rent but must never be deducted from a deposit which must be retained in accordance with the scheme rules in a client account.
- Estate agents selling an owner's property are entitled to commission. However, there are situations where estate agents argue about which agency was responsible for introducing the tenant or buyer and who contributed most to the sale. In sales, always check the terms and whether it is based on Sole Agency, Multi-Agency as well as what happens if the seller sells to say a friend or neighbour where the agent takes no active part in the sale. Foxton's v hamptons 2008 is a case in point. Held: the agent claiming commission must be the effective cause of the sale where more than one agent contributes.
- Note that both selling and letting agents are likely to have a Tie-In period of say 6 weeks to 3 months.
- Sole selling rights means the seller's appointed agent is the only one permitted to sell within the tie-in period and commission is likely payable regardless of involvement in the sale when sold. If the buyer is "ready willing and able" and the seller decides not to sell then the seller may be liable to pay the agents commission.
- Sole agent is slightly different in that if the seller finds the buyer the agent is unlikely entitled to any commission.
- If you limit the number of agents to two, this is called a joint sole agency. The fee is normally higher and the agents split the commission between them following sale.
- Notice periods follow the end of the tie in period. E.g. sellers provide say 14 or 28 days notice advising the agent of the intention to end any agreement with the agent on the final day of the notice leaving the seller free to sell themselves or through an alternative agent.
- Agent tactical switching can involve starting with one agent for an agreed short term say up to 6 weeks. In the event the property remains unsold the seller invites multiple agents at a higher feet. The first agent is thus incentive to sell within the initial period and the seller takes advantage of the potentially lower initial commission.
- In a 2015 a landlady Mrs Collins successfully argued that no further commission was due the agent following failure to provide adequate notice of her intention to sell her rented home, managed by her letting agent. Having evinced the sale it was held: In order for the agent to charge commission in such circumstances, an agent must prove is suffered a material disadvantage and consequential loss. Since the tenancy would have ended anyway no loss was suffered so no claim for breach was acceptable. Note had the property not been sold the commission would likely have been payable.
Published: 24 September 2015 Last Updated: 17 November 2021