Long-term property transactions are increasingly common in both Queensland and New South Wales. While these deals can be highly rewarding, they also present a significant challenge for agents where commission is often delayed until settlement, which may be months or even years after you’ve done the work, cautions Business and Commercial Law Senior Associate, Tobie Mitchell.
Why timing matters
Under the standard frameworks in both states:
- Form 6 Appointment under the Property Occupations Act 2014 (Qld); and
- Agency agreement requirements under the Property and Stock Agents Act 2002 (NSW)
An agent’s entitlement to commission typically arises on settlement. While this works for standard sales, it creates real cash flow issues for long-term projects where settlement dates are extended repeatedly for reasons outside your control.
Delayed Commission
Imagine this: you secure a buyer for an industrial building with a settlement set in six months. A few months later, the vendor and buyer agree to extend the settlement by another 18 months. The seller may also receive a non-refundable deposit during this period.
- You’ve done your job: introduced the buyer and negotiated the contract.
- The seller may already benefit financially.
- Yet, you’re still waiting for your commission.
In situations like this, the agent bears the risk of delay while the seller benefits, highlighting the importance of clear agreements.
Non-Refundable Deposits
Sellers sometimes negotiate non-refundable deposits or early release of deposit monies. If the buyer defaults, these funds are forfeited to the seller. However, under standard terms, you are not automatically entitled to commission from these funds unless your agency agreement expressly provides for it.
Tips for each state
NSW: Since December 2019, early release of deposits for off-the-plan contracts has been prohibited. For other transactions, a “release of deposit” clause can be included in the contract, but this carries risks for the purchaser and should be carefully drafted.
QLD: The standard REIQ terms allow commission to be payable if the deposit is forfeited, but not automatically on early release unless the Form 6 includes a special condition.
Practical Solutions
The good news is that you can address this risk upfront by negotiating special conditions in your agency agreement. Two key strategies are:
Commission Payable on Early Release of Deposit
If the seller negotiates an early release of deposit funds (or receives a non-refundable deposit), your agency agreement should state that commission becomes payable at that point, not at settlement. This ensures you are compensated when the seller benefits financially.
Special Condition for Extended Settlements
For projects with extended settlement periods, include a clause in your Form 6 (QLD) or agency agreement (NSW) that addresses delays outside your control. For example:
“If the contract of sale is extended from the original settlement date for reasons outside the agent’s control, the agent’s commission (or part thereof) becomes payable upon the contract upon release of any non-refundable deposit to the seller.”
Best Practice Tips
- Discuss it upfront: Explain to vendors why these clauses protect both parties.
- Document it properly: Verbal agreements won’t suffice. Ensure the Form 6 (QLD) or agency agreement (NSW) clearly states when commission is due.
- Seek advice: Poorly drafted clauses can create compliance issues or unintended consequences.
Final Thoughts
Long-term deals can be highly profitable, but they also carry cash flow risks for agents. By proactively negotiating special conditions in your agency agreements, you can secure your commission and avoid the uncertainty of waiting years for settlement.
Attwood Marshall Lawyers – Protecting Your Commission on Long-Term Deals
Not every agency agreement is designed to protect your commission in long-term transactions. The right approach ensures your entitlements are secured, reduces risk, avoids surprises, and keeps the deal moving smoothly.
For agents, that also means a better client experience, improved cash flow certainty, and more time to focus on what you do best.
At Attwood Marshall Lawyers, our Property and Commercial Law team works closely with agents, vendors, and buyers every day. We understand the challenges of long-term deals and provide practical, industry-specific advice to help you secure your commission and navigate extended settlements with confidence.
If you would like sample wording for these clauses or advice on compliance with the Property Occupations Act (QLD) or Property and Stock Agents Act (NSW), please contact our Property and Commercial Law Department Manager, Jess Kimpton on direct line 07 5506 8214, email jkimpton@attwoodmarshall.com.au or call our 24/7 phone line on 1800 621 071.
