Ms Hui inspected a number of flats through estate agent A, became interested in one of them, but failed to agree on a price with the vendor. A few days after that, Ms Hui negotiated with the vendor again through estate agent B and finally succeeded in purchasing the flat. Ms Hui told agent B that she had signed an estate agency agreement with agent A. Agent B told Ms Hui not to worry and signed a written agreement with her undertaking that if agent A demanded commission from Ms Hui, agent B would pay it for her. The agreement was to be valid for three months.
Six months later, Ms Hui received a letter from agent A demanding commission. Ms Hui at once notified agent B but, since the three-month period had expired, agent B refused to pay the commission for Ms Hui on that ground.
According to the estate agency agreement signed by Ms Hui with agent A, Ms Hui had to pay commission to agent A if the purchase was effected within the validity period, regardless of whether the transaction was made through agent A. Although agent B undertook to pay the commission for Ms Hui upon demand of agent A, the undertaking was valid for only three months. Generally speaking, civil actions have a limitation period of 6 years. Agent A has therefore the right to claim commission from Ms Hui within six years. The undertaking Ms Hui got from agent B had not sufficiently protected her.
In order to entice prospective purchasers, some agents would make a pledge to take care of the commission due to other agents. When such a pledge is not made in writing, it may be difficult for the purchaser to prove the existence of such undertaking. Even if it is in writing, it is important to note if there are other conditions attached, e.g., the agent will only pay the commission for the purchaser after the other agent has filed a suit against the buyer and wins.
In addition, the consumer should also note the responsibility for paying commission under the estate agency agreement. It is not confined to the case where the signatory has himself bought the property, but includes the purchase of the property by his spouse or nominee. Therefore, a prospective purchaser should not be under the misconception that, if he signs an estate agency agreement with one agency, and instructs someone else to negotiate the purchase of the same property through another agency, he can avoid the responsibility for paying the first agency a commission.
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