IEA Guide for Builders and Sellers
August/September 1999

This article discusses how an estate agent could claim his or her commission from the client upon rendering marketing services at his or her request. It should be borne in mind that facts differ from case to case and there is no perfect formula for the recovery of an agent's commission.

Need to have a proper written agreement between agent and client and proper records of transactions/dealings

It is important for an estate agent to have a proper written agreement with the client, prior to commencing work as an agent. Although absence of a written agreement is not fatal to enforcing an agent's claim for commission, it would be difficult without one. A written agreement is very useful because it acts as a foundation or cornerstone of the agent's claim against the client. It obviates the need to prove the terms (assuming that the terms are already part of the written agreement) relied on by the agent to establish his or her case in the courts, especially if such terms are in dispute. What only needs to be proved is that the agreement was properly executed and thus, valid and binding on both parties.

Such a written agreement should ideally specify, amongst other things:

1. the property to be marketed or sold (in the case of a seller);
2. the name of the client and the agent marketing on behalf of the client;
3. the rate of commission payable; and
4. when or on what occasions is commission payable;
5. the ideal price the property is to be sold (in the case of seller); and
6. the ideal price or price range and the type of properties the client is seeking to purchase (in the case of buyer).

Aside from the written agreement the agent should also keep proper records of the transactions and meetings he or she has with the client and the meetings between the client and potential buyers or sellers, which the agent has recommended or introduced. This is to protect the agent from an allegation that the agent was not the effective cause of the sale (or purchase) because the buyer (or seller) was not recommended or introduced to the client by the agent.

Even if the agent has had a proper written agreement drawn up between himself or herself and the client, the client may still refuse to pay the agent his or her commission after services had been rendered, for various reasons. The agent could then take the following steps to recover his or her commission.

Scrutinising the agreement

First of all, it is important to scrutinize the written agreement, to determine whether the agent has fulfilled all his or her obligations required and/or whether all the conditions have been satisfied before being entitled to commission. As most commissions are only payable upon the occurrence or happening of certain events, like the sale of a property to a purchaser recommended by the agent, or the purchase of a property recommended by the agent, the question to be asked is therefore, whether such an event has occurred or happened in the manner envisaged by the agreement.

Once an agent is satisfied that he or she has fulfilled all the obligations required and that all the conditions have been met entitling him or her to commission, the agent should then render an invoice to the client. If the agent is unsure of the position, he should consult either the company legal officers or a lawyer.

Rendering an invoice to client

The invoice should specify the date and nature of the transaction entitling the agent to commission, the amount of commission payable and the dateline for payment (usually 30 days from date of invoice).

Optionally, there could also be a covering letter addressed to the client stating the facts how and why commission is payable to the agent. Preferably, the clause in the written agreement relied on by the agent should be cited.

If there is still no payment by the dateline, or if the client disputes the invoice, the agent may then proceed to see a lawyer with a view to commencing an action against the client, or if he or she does not intend to engage a lawyer, to proceed to file a claim in the Small Claims Tribunal, either by himself or through the company legal officer.

Engaging a lawyer

The agent should brief the lawyer fully on the facts of the matter, and produce to him or her all the necessary documents, such as the commission agreement, invoice, Sale & Purchase Agreement of the property in question, etc. At the agent's instructions, the lawyer will then file a suit against the client and advise him on the matter. If successful, the agent should obtain payment from the client, including payment of his or her legal fees, and/or Judgment against the client for the amount due.

Starting a claim in the Small Claims Tribunal

The Small Claims Tribunal is located at Apollo Centre, 5th floor, Havelock Road. A claim is filed by filling a form, attaching to it the necessary documents such as the commission agreement, invoices, etc and paying a fee (about $10.00). The Small Claims Registry would serve the papers on the client who is known as the Respondent and a date will be fixed before the Small Claims registrar for both parties to appear.

It is important for the agent or the company legal officer not to miss the appointment before the Small Claims registrar, as the registrar has a discretion to dismiss the action if there is no good excuse to be absent for the appointment, which is also known as a "hearing".

At the hearing, the agent or the company legal officer should present his case frankly and fully to the registrar. With the submission of all the documents substantiating the claim and the account of how his or her obligations had been fulfilled under the agreement, entitling him or her to the commission, the agent should be able to obtain a favourable order or Judgment. If the client still does not pay up the Judgment sum, or the sum as ordered, the agent has recourse to a number of execution modes, to enforce the Judgment or Order. For this purpose, the agent would usually have to engage a lawyer.

Enforcing the Order or Judgment

The Order or Judgment can be enforced in a number of ways. The common ways are as follows:

1. Writ of seizure and sale of movable property - this is a mode whereby an order is given to the Bailiff of the Subordinate Courts to seize the goods or assets of the judgment debtor (ie the client), at the debtor's place of residence or business. Upon seizure, a date will be scheduled for the sale of the assets via auction; the monies collected from such a sale are then paid to the judgment creditor (ie the agent) after payment to the bailiff and the lawyer for their fees.
2. Writ of seizure and sale of immovable property - this is a mode whereby an order is given to the Bailiff of the Subordinate Courts to seize the house or flat of the judgment debtor. Upon seizure, a caveat is lodged with the Registry of Titles. Soon after that a date is scheduled for the sale of the property. Likewise, the monies collected from such a sale are then paid to the judgment creditor, after payment to the bailiff and the lawyer for their fees.
3. Garnishee Order - this is an order ordering a third party (usually a bank) who is indebted to the judgment debtor to pay the debt over to the judgment creditor.
4. Bankruptcy - this is an order declaring the judgment debtor a bankrupt. A petition for bankruptcy would have to be prepared and personally served on the judgment debtor. The whole process could take up to 3 to 6 months and this could be quite expensive. If the judgment debtor is made a bankrupt, his financial affairs would be under the control of the Official Assignee. Payment may only be made if there are surplus funds in the bankrupt's estate, after paying off all secured creditors. The new bankruptcy laws coming into effect however requires the debt to be at least $10,000.00 before a person can be made a bankrupt.
5. The agent would have to decide which mode of execution he intends to utilize. On a successful execution, he is likely to recover most if not all of his legal fees incurred.

Conclusion

An agent should bear in mind that his or her case for recovery of commission depends largely on how well he or she has performed the role and duties of an estate agent in relation to the client and his property. A written agreement, no matter how well drafted it is, cannot save an agent's commission if the agent has failed to fulfill even his most fundamental obligations under the agreement. Moreover, he or she may also be liable in damages to the client for losses suffered as a consequence of such negligence. As these matters concern the duties and liabilities of an estate agent, they are subject of a separate topic of discussion and therefore outside the scope of this article. Hence, we shall not venture to discuss further.