There are four types of estate agency agreements: for use between a vendor and an agent, between a prospective purchaser and an agent, between a landlord and an agent, and between a prospective tenant and an agent. Their contents and formats are prescribed by the EAA to safeguard the parties' rights and interests in the buying, selling or leasing of a property.
Last month, Mrs Ma signed an estate agency agreement with an agency company, to instruct it to list her flat for sale. The agreement stipulated that if she would enter into a binding agreement for sale and purchase with a purchaser through the agent within the validity period, Mrs Ma would pay the agent 1% of the transacted price as commission.
A month later, the flat was sold through this estate agency company at a price of $2 million. Mrs Ma signed a provisional agreement for sale and purchase with the purchaser. The purchaser represented that he had some cash flow problem and preferred to pay only $10,000 as initial deposit. Mrs Ma thought that he was sincere and agreed to take this amount, which was smaller than usual, as initial deposit. At the same time, she paid the estate agency 1% of the price of the flat, ie, $20,000, as commission.
Before the signing of the formal agreement for sale and purchase, the purchaser informed Mrs Ma that, for personal reasons, he would not proceed with the deal. Mrs Ma forfeited the $10,000 deposit, which was less than the commission she paid to the agent. Fortunately, it was clearly provided in the estate agency agreement that if completion of the property transaction should fall through without fault on the part of the vendor, then the vendor would have no obligation to pay any commission to the agent. Furthermore, if the commission had been paid, the agent had to return it as soon as possible. The estate agency returned the full amount of the commission to Mrs Ma according to the agreement, which was greatly appreciated by Mrs Ma. Mrs Ma congratulated herself on signing the estate agency agreement prescribed by the Authority, thereby enabling her to recover the commission already paid.
In the past, the terms and conditions in the letters of appointment and property viewing forms then in use varied and protection was not comprehensive, giving rise to many disputes. After the implementation of the new regulations, the use of standard documents have made property transactions open and fair and will reduce the number of disputes between estate agents and their clients.
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