by Tim O’Dwyer M.A., LL.B
The following tale was sent to me by a legal colleague. He described it as “a little anecdote” that he was sure I would enjoy.
“My client owned a rental property that he leased through a local agent. The tenant wanted to purchase the property. They negotiated a price and my client then asked the tenant to speak to the managing agent about the matter. The agent promptly drew up a sale contract (they are usually very prompt at drawing up contracts) and both parties signed. I was still not on the scene at this stage. My client then said to agent.” We need to talk about commission. As you have not had to do any work other than prepare the contract, we will have to agree on what the commission will be.” The agent then aggressively advised that his agency “does not negotiate on commission in any circumstance.” My client thought he was being screwed, so he came and saw me. I asked him for a copy of the agent’s authority to sell. What authority to sell, he replied. The only thing he had signed with the agent was the sale contract.
You guessed it. In his haste to do the deal the agent did not get his client to sign an authority to sell. I promptly told the agent that he was not entitled to any commission. The principal of the agency then rang my client and told him that he had a moral obligation to pay “at least some commission.” My client promptly told him he needed to reconsider his ‘no negotiation’ policy. I then informed the principal that, if he contacted my client again, I would be reporting him to the Office of Fair Trading.
The happy ending to the story is that my client is still selling his house. He is happy. And the tenant is happy because he is getting a house he knows and loves. The agent is not receiving any commission – and is very, very unhappy.
Hope this puts a smile on your dial, Tim.”