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REIQ Journal : August 2008
20 INDUSTRY PRACTICE Barry Cotterell, Chairman, REIQ Professional Standards Tribunal According to the appeal submissions made by the respondent: On 23 November 2007, the buyers inspected the property. On 26 November 2007, they inspected it for the second time and made an offer to buy. Contractual negotiations commenced. On 26 November 2007, the buyers signed a contract of sale for the property. Some changes needed to be made to the contract, which were verbally agreed to and made as handwritten amendments to the contract. They were initialed by the buyers on 27 November 2007 at about 7pm. On 28 November 2007, at about midday, the sellers signed the contract of sale. While these facts were provided by way of submissions from the respondent they were not contested by the claimants. The contract of sale executed on 28 November 2007 settled. The buyers wanted to live in the property once they had bought it. The tenants of the property had a lease to occupy the premises until 5 May 2008. The buyers insisted that the contract of sale include a Special Condition 5 in which the tenants would vacate the property on or before 15 January 2008. This condition of the contract was satisfied on 29 November 2007. Entitlement to commission The Tribunal decided the respondent was entitled to retain the commission. The respondent was the “effective cause of sale” on 28 November 2007, and the claimants’ exclusive agency did not commence until midnight on 28 November 2007 – that is, effectively 29 November 2007. The Tribunal noted that the term of the claimants’ agency as stated in their Form 22a would commence on 28 November 2007. However, the Tribunal also considered that it was “equally clear” from the facsimile that the agency would commence from midnight on 28 November 2007. The Tribunal noted that it was true, as it was argued by the respondent, that there is only one midnight on 28 November 2007. However, it was acknowledged that the issue was not without its complications. The Form 22a does not, in any event, provide for commission to be payable if a contract of sale is signed during the term of an agent’s appointment. Rather, commission is payable if the “effective cause of sale” occurred during the term of the agent’s appointment, regardless of whether a contract is signed during the term. REIQ Journal August 2008 Consideration The Tribunal, and the subsequent Appeals Tribunal, were satisfied that the respondent was the effective cause of sale. As of the close of 27 November 2007 contractual negotiations between the buyers and sellers were complete. The buyers had signed the contract of sale, but the sellers had not. However, the sellers were aware of the terms and conditions on which the buyer was offering to buy the property. Therefore, as at 27 November 2007, the respondent had provided to the sellers a buyer willing to sign a contract to the sellers’ satisfaction. All that remained was for the contract to be signed by the sellers, which was done on 28 November 2007. Importantly, no further negotiations were undertaken between the buyers and the sellers on 28 November 2007.