Real estate agents earn commission in return for navigating complex negotiations, managing high expectations, and investing significant time and energy into securing the best outcome for their clients. Yet, from a legal perspective, we often see agents inadvertently jeopardise that hard-earned income through entirely preventable mistakes. Attwood Marshall Lawyers Property and Commercial Law Senior Associate Tobie Mitchell explores.
Working across commercial and property law, nationally and on the eastern seaboard, Attwood Marshall Lawyers frequently assist with disputes over commission. These disputes often stem from simple, avoidable errors made early in the transaction.
Understanding these common mistakes is the first step towards protecting your commission. Here, we look at some of the most frequent culprits and offer tips to mitigate the risks of costly legal issues.
Mistake 1: A flawed foundation – invalid or defective appointment agreements
The bedrock of commission lies in agency agreements. In New South Wales and Queensland, a valid, written agency agreement (e.g. your “Form 6” in QLD or relevant agency agreement in NSW) is generally mandatory to legally claim commission.
Your appointment form can be deemed invalid if it is incomplete, incorrectly filled out (with wrong entity names or incorrect property details, for example), expired, improperly signed by the vendor or has an ambiguous commission structure.
An invalid appointment can result in no or lower commission, even if you successfully sell the property. Disputes can also arise when the agreed commission isn’t clearly stated or calculated.
Tips to minimise risks:
- Always use the latest, compliant versions of agency agreements for your state,
- Double-check every detail – vendor names (title search checks), property description, the start and end of appointment dates, and commission calculation,
- Make sure all owners (and signatories for trusts and companies) sign an agency agreement before you commence services, and
- Clearly define the commission (e.g., percentage, fixed amount, GST inclusive/exclusive).
Mistake 2: Losing the “Effective Cause of Sale” battle
When you secure a listing, you are generally only halfway and still need to take further steps to prove that you were the “effective cause” of the sale. This means demonstrating that your actions caused the buyer to ultimately purchase the property.
Disputes often arise with open listings, conjunctional arrangements, or when a buyer initially introduced by you later purchases through another agent or directly from the vendor (sometimes behind your back) after your appointment ends.
If you can’t clearly demonstrate your agency was the proximate and efficient cause of that specific transaction completion, your claim to commission can be successfully challenged.
Tips to minimise risks:
- Document everything – initial buyer contact, inspections (dates, times, attendees), offers submitted, key communications, and follow-ups,
- Regularly update your vendor on your activities and the buyers you are working with,
- When introducing a buyer, especially under an open listing, consider confirming this introduction in writing (email) to both the buyer and vendor (where appropriate), and
- If working with another agent, have an explicit, written conjunction agreement outlining roles and commission splits before introducing buyers.
Mistake 3: Misrepresentation and non-disclosure traps
While your primary duty is to the vendor, you also have obligations to buyers regarding representations made about the property. Exaggerated claims or failing to disclose known material facts can unravel a deal or lead to legal action.
If a buyer successfully terminates a contract (or seeks damages) due to a misrepresentation made by you (or because you failed to pass on crucial information provided by the vendor), the sale can collapse.
Tips to minimise risks:
- Ensure that the buyer agrees in writing (preferably by a special condition) that they have not relied on any representations or verbal promises by you or the vendor, in the contract of sale,
- Check with the vendor to see if they have made any verbal promises. If so, make sure it is accurate, and if in doubt, obtain the vendor’s disclosure in writing where possible,
- Avoid speculation or guesswork that could be construed as a factual representation, and
- Always encourage buyers to conduct their own thorough due diligence (through building and pest inspections, legal advice, and council searches, for example).
Mistake 4: Fumbling critical contract conditions and dates
The exchange of a contract is not your final hurdle. Most contracts are conditional upon finance approval, satisfactory building and pest inspections or other specific terms. Managing these conditions and their deadlines is crucial.
If critical dates like finance approval or building and pest satisfaction are missed, and extensions aren’t properly secured, the contract can automatically terminate, or one party may gain termination rights.
A collapsed contract means no completed sale, and therefore, typically no commission. Poor communication around the satisfaction or waiver of conditions can also lead to disputes and termination.
Tips to minimise risks:
- Track all conditional dates and ask the solicitors, brokers, and inspectors involved to copy you into correspondence, so you can keep up to date with progress on any conditions,
- Liaise with the buyer and note any concerns that they may have – you might be able to smooth over a minor issue that might otherwise be a deal-breaker if left unchecked,
- If an extension is needed, agents can help where possible to smooth over extension requests (which in turn minimises the chance of a buyer withdrawing from a contract), and
- Ensure that a copy of your commission invoice is sent to the seller and their solicitor well before settlement. Verify account details over the phone to minimise the risk of cyber hackers altering your account details.
Protecting your hard work
These are just a few examples of commission catastrophes, but they highlight how important attention to detail is for securing commission. Diligence in paperwork, clear communication, thorough record-keeping, and honesty in representations are not just “best practice” – they are fundamental to achieving a successful result and eventual commission.
If you encounter a complex issue or are unsure about your legal standing regarding an appointment or potential commission entitlement, seeking early legal advice is always the most prudent course of action. Investing a small amount in proactive advice can save you from losing a significant commission down the track.
Attwood Marshall Lawyers – your local property law experts
Attwood Marshall Lawyers has been helping clients navigate property transactions for over 75 years. We work closely with agents across Queensland and New South Wales to make sure that contracts are clear, enforceable, and tailored to the deal at hand, helping them get to settlement faster and secure their commission.
Get in touch with our property law team for practical advice on listing agreements, contract terms, and avoiding common pitfalls. Contact our Property and Commercial Law Department Manager Taylah Lein on direct line 07 5506 8208, email tlein@attwoodmarshall.com.au or call our 24/7 phone line on 1800 621 071.
We also have a dedicated commercial litigation team who specialise in contract disputes and who can give careful advice and guidance to reduce and potentially avoid any issues. If you are involved in a property dispute, please contact our Commercial Litigation Department Manager, Georgia Trapp, on direct line 0498 499 122, or email gtrapp@attwoodmarshall.com.au to find out where you stand.
