By Samuel McMahon

5 August 2015

Real estate agents are, generally speaking, well aware of the necessity to comply with the requirements of the Estate Agents Act in their appointment.

Those requirements are set out in sections 48A, 48B and 49A of the Estate Agents Act, and include the following:

  • The agent must not retain any rebates, or seek from a client any amount that exceeds the anticipated outgoings.
  • Before obtaining the client’s signature on the appointment, the agent must inform the client that the commission and any outgoings are subject to negotiation.
  • The agent’s appointment must be in writing, and must contain:
  • Details of the commission and outgoings agreed;
  • If a fee is calculated on a percentage basis, a statement of that fee both as a percentage and in a dollar value (the price for this purpose is estimated from the reserve price or other amount on the engagement).
  • A rebate statement in the prescribed form.
  • A complaint statement in the prescribed form.
  • The agent must give the client a copy of the signed appointment.
  • The agent must retain copies of the documents required by the Act for the prescribed period.

A recent decision of the Victorian County Court underlines the importance to agents of scrupulously observing each detail of the requirements under the Act.

In Cross Country Realty & Anor v. Ubertas 350 William Street Pty Ltd [2015] VCC 2012, a decision handed down on 31 July 2015, the estate agent, who had already received over $3,000,000 in commission from the developer, sued the developer for a further $186,455 alleged to be owed. Unfortunately for the estate agent, the agent had not complied with the mandatory disclosure requirements stipulated in the Act, and therefore had to admit their omission in that regard. The consequence of this was that the estate agent not only had no basis to claim the $186,455, but was also ordered to repay the $3,000,000 to the developer. This could be described as a windfall for the developer, given that the developer had probably benefited greatly from the estate agent’s services regardless of whether it suffered any disadvantage because of the non-disclosure. However, the Act is unambiguous in its terms, and benefits which the developer (or any other client) might have received from the agent are irrelevant when considering the legal question of whether an agent is entitled to receive or retain a commission.

Given the huge sums often at stake in commission deals, agents must be careful to ensure strict compliance with the requirements of the Act and be able to prove that compliance if required. Proving when, where and how the client was informed that the commission and any outgoings were subject to negotiation is made much easier if this is done in writing – and prior to the client signing the authority. Proving complete compliance with the other requirements is made easier if separate records are kept of each step.

It is common for agents’ authorities to contain an “acknowledgement” by the client that the client has been informed of the fact that the commission and outgoings are subject to negotiation. But if the client does not or cannot read the authority prior to signing, this could destroy the agent’s right to commission. It is therefore recommended that the agent carry out this step separately.

It is also recommended that the client’s signature be obtained on an acknowledgement that the client has received a copy of the signed authority – and this must, logically, be a separate document from the authority itself.


For expert Real Estate Agent advice, please contact Samuel McMahon or a member of our Real Estate Law team.

Related Articles

View All
Commercial Law / Commercial Contracts & Agreements / Property & Development

Commercial and Industrial Property Tax Reform – What does it actually mean?

The reform will implement change progressively from 1 July 2024 and will look like this: This reform presents an...
Read More
Commercial Law / Commercial Contracts & Agreements / Employment Law

Payroll Tax – Medical Centres and Contracted Practitioners

  The recent SRO Ruling (PTA-041) on 11 August 2023, confirms the SRO’s stance on the payroll tax obligations of...
Read More
Commercial Contracts & Agreements / Leasing & Lease Disputes / Property & Development

Exercising Options

If a lease is a retail lease, the provisions of the Retail Leases Act (Vic) (2003) will govern the exercise of option...
Read More
Commercial Law / Family Law

2023 Mid Year Promotions: Sarah Gilcrist and Eliza Panckridge

Sarah joined TLFC in January 2022 and quickly became an integral part of the Commercial Team, specialising in lending...
Read More
Commercial Law / Property & Development / Developments

2023-2024 State Budget Recap

Acquisitions of Commercial and Industrial Properties From 1 July 2024, Land transfer duty (stamp duty) on commercial...
Read More
Adverse Possession / Commercial Law / Family Law

2024 Best Lawyers list out now

Tisher Liner FC Law are proud to announce that this year three of our Principals have been selected by their peers for...
Read More
Commercial Law / Employment Law / Litigation & Dispute Resolution

International Women’s Day 2023: Embrace Equity

Have you ever wondered why the hallmark colours of International Women’s Day are vibrant purple, bold green and stark...
Read More
Commercial Law / Litigation & Dispute Resolution / Real Estate Agents

Pitfalls of exercising options

If the lease is subject to the Retail Leases Act 2003 (Victoria), then there are only two conditions that can be...
Read More
Commercial Law

Have you registered your .au domain name? Don’t miss out on the deadline for priority registration

Why is priority registration important Until 20 September 2022, you will have priority to register the direct domain...
Read More
Commercial Law / Commercial Contracts & Agreements / Litigation & Dispute Resolution

Recording | TLFC Law Lunchtime Briefing | Commercial Matrimony – Marry/Battle/Kill

The slides are also available Please click here to view the PowerPoint Slides   Facilitated by Ron Cohen...
Read More
Commercial Law / Real Estate Agents / Owners Corporations & Strata

Changes for Real Estate Agents and Owners Corporation Managers

What are the applicable jurisdictions Current jurisdictions included are Victoria, New South Wales, South Australia,...
Read More
Commercial Law / Commercial Contracts & Agreements / Start-ups & Emerging Enterprises

Frustration, Force Majeure & Risk: Lessons for Business in Uncertain Times

Why is a force majeure clause so important A “force majeure” clause is a provision addressing the parties’ rights...
Read More