Agency Agreement Question

GianBel

Hi,

We put our property up for sale in December 2018 and have become increasingly unhappy with our current EA.

We are now hoping to change EA, or at least adding a second EA. Unfortunately, our contract isn't 100% clear to us. We would like to switch/add EA's without incurring additional costs - or even worse... paying twice!

Reading the contract makes me think that we are properly tied in with the current EA, having to give them 14 days notice + an additional 6 months after that in which they would still be eligible to a commission if we sold through another EA (even if the buyer had never dealt with the original EA).

I'm just hoping I'm wrong here, as I have little to no faith in the current EA ever selling our house and having waited over 1 year already to sell I'd rather not wait an additional 6.5 months to start over again with a new EA.

I've included what I believe are the relevant parts of the Agency Agreement and the T's & C's.

Agency Agreement
7. Type of Agency – Important: see Terms and Conditions
The Seller agrees to instruct the Agent on the basis of a Countrywide Agency.
The Agency Period is 16 weeks beginning on December 2018.

8. Commission Fee – Important: see Terms and Conditions
The Countrywide Agency Fee/Rate shall apply for the Agency Period and for any subsequent extension of the Countrywide Agency. If on expiry of the Agency Period or any extension of it the Agency becomes a Multiple Agency/Joint Agency, the Multiple Agency/Joint Agency Fee/Rate shall apply for the term of the Multiple Agency/Joint Agency.
Percentage Fee
The Commission payable to us is a percentage of the price for which the Property is sold. If the Selling Price sells for more or less than the Initial Marketing Price our Fee will increase or decrease accordingly, subject to a Minimum Fee.

Countrywide Agency, The higher of:
The Percentage Fee is 1% of the Selling Price exc vat OR The Minimum Fee of £417 exc vat

TERMS AND CONDITIONS OF THE COUNTRYWIDE AGENCY AGREEMENT
1. Entitlement to commission
1.1 The Commission Fee is the amount set out in the Agency Agreement. The Commission Fee is payable under the circumstances set out in clause
2 and/or clause 3 below.
1.2 The Commission Fee will be payable whether the introduction is a direct introduction or an indirect introduction (where the Buyer makes the
purchase as a result of becoming aware that the Property was for sale through the marketing of the Property by the Agent) and whether or not
the Buyer makes the offer to purchase through another Agent or through any other person. Another Agent is someone involved in estate agency
work or someone who in the course of a business introduces a Buyer to the Property but has no further involvement.
1.3 The Agent’s contractual responsibility is confined to marketing the property and the other obligations set out in this Agreement, and any further
assistance in relation to the purchase is entirely at the Agent’s discretion.
1.4 In the event of a part exchange, any Commission Fee calculated by a percentage rate will be calculated on the full Selling Price of the Property.
1.5 The Commission Fee calculated by a percentage is calculated on the price of the Property, including any contents, carpets or fixtures and fittings.

2. Countrywide Agency
2.1 The Agent will be the only agent for the sale of the Property during the Agency Period (the Countrywide Agency).
2.2 The Seller will be liable to pay the Commission Fee to the Agent, in addition to any other costs or charges agreed, in each of the following
circumstances:-
• if unconditional contracts for the sale of the Property are exchanged in the period during which the Countrywide Agency is in force, even if
the Buyer was not found by the Agent but by another agent or by any other person, including the Seller;
• if unconditional contracts for the sale of the Property are exchanged after the expiry of the period during which the Countrywide Agency is
in force but to a Buyer who was introduced to the Seller during that period or with whom the Agent had negotiations about the Property
during that period.
However, the Seller will not be liable to pay the Commission Fee in any of these circumstances if the unconditional contracts for the sale of the
Property are exchanged six months after the expiry of the period during which the Countrywide Agency is in force and where the Seller has
appointed another estate agent whose activities have resulted in the sale of the Property or twenty four months after the expiry of the
Countrywide Agency in all other circumstances.
2.3 On expiry of the Agency Period, unless terminated by either side by a minimum of 14 days’ written notice expiring on the last day of the Agency
Period, the agency shall continue as the Countrywide Agency until either:-
• it is terminated by either the Seller or the Agent on 14 days’ written notice; or
• the Seller by 14 days’ written notice to be served not earlier than the last day of the Agency Period converts the Countrywide Agency into a
Multiple Agency, which Multiple Agency shall then continue on the terms set out in clause 8 of the Agency Agreement and in clause 3
below; or
• the Seller appoints another agent without giving any or any adequate notice, in which case the Countrywide Agency will continue to apply
save that the Multiple Agency Commission Fee would be payable if a fee becomes due.

3. Multiple Agency
3.1 If this Agreement is on a Multiple Agency basis or it becomes a Multiple Agency Agreement following the conclusion of a Countrywide Agency the
Seller may from the commencement of the Multiple Agency appoint another estate agent or agents in addition to the Agent.
3.2 The Multiple Agency period (the “Multiple Agency Period”) shall continue until terminated by either the Seller or the Agent giving the other party
14 day’s notice in writing expiring on or after the Agency Period, in which case it shall terminate on the last day of the notice period.
3.3 The Seller will be liable to pay the Commission Fee to the Agent, in addition to any other costs or charges agreed if at any time unconditional
contracts are exchanged with a Buyer introduced by the Agent or with whom the Agent has had negotiations about the Property during the
Multiple Agency Period. However, the Seller will not be liable to pay the Commission Fee in any of these circumstances if the unconditional
contracts for the sale of the Property are exchanged six months after the expiry of the Agent’s Multiple Agency Period and where the Seller has
appointed another estate agent whose activities have resulted in the sale of the Property, or twenty four months after the expiry or the Agent’s
Multiple Agency Period in all other circumstances.

4. Dual Fee Liability
If you (the Seller) have previously instructed another agent to act for you, or if in the future you instruct another agent, you may become liable to
pay the other agent a fee as well as any fee due to us under this Agreement. You should therefore consult the terms of business of any
agreement you have entered into with the other estate agent.

5. Payment of Commission Fee
5.1 The Commission Fee will become due on exchange of unconditional contracts for the sale of the Property and payable on the earlier of
completion or 60 days after exchange of contracts (“the due payment date”). The Seller agrees that the Agent may carry out a credit search on
the Seller at any time after payment of the Commission Fee has become due.
5.2 The Seller agrees to instruct and authorise its legal representative to give, no later than exchange of unconditional contracts for the sale of the
Property an undertaking to the Agent to pay from its Client Account the Commission Fee as set out in clause 5.1 above. The Seller agrees that
the Agent may send its invoice direct to the Seller’s legal representative. The Seller may revoke his instruction pursuant to this clause if he
considers that there are grounds to do so by writing to the Agent stating the reasons.
5.3 The various Prepayments/Other Charges itemised on the attached Schedule (if applicable) are due and payable in accordance with the Schedule
irrespective of whether the Commission Fee is due.

eddddy

GianBel wrote: »

Reading the contract makes me think that we are properly tied in with the current EA, having to give them 14 days notice + an additional 6 months after that in which they would still be eligible to a commission if we sold through another EA (even if the buyer had never dealt with the original EA).

No - that's not quite right.

You only have to pay Countrywide a fee if a buyer was introduced by an EA during Countrywide's sole agency period.

It's probably easiest to explain with an example:

Lets say your contract with the Countrywide runs from 1st Dec 2018 to 1st Feb 2020 (i.e. about 14 months).

• If Countrywide or any other estate agent introduced Mr Smith sometime between 1st Dec 2018 and 1st Feb 2020...

• ... and Mr Smith goes on to buy your property within the 6 months after you terminate Countrywide's contract (i.e. before 1st Aug 2020)...

• ... then you have to pay Countrywide their fee

But if you sell to any buyer introduced by an EA after 1st Feb 2020 (or any buyer that you found privately), no fee is payable to Countrywide.

GianBel

Even with your explanation, reading the contract again it is still unclear to us. So thank you very much for clarifying that for us @eddddy!

So essentially, as long as we don't sell to anyone that was introduced between December 18th and the end of our 14 day notice period, we will only pay the commission once.

Any chance you can explain what happens if we add another EA? Is it a similar scenario where after a 14 day notice period, when the contract has changed in to a Multiple Agency/Joint Agency, we would only pay once as long as again the person had not been introduced during the sole agency period?

eddddy

GianBel wrote: »

Any chance you can explain what happens if we add another EA? Is it a similar scenario where after a 14 day notice period, when the contract has changed in to a Multiple Agency/Joint Agency, we would only pay once as long as again the person had not been introduced during the sole agency period?

The concept is fairly simple, I'm not sure if you've grasped it or not.

The basic model is that you pay the EA that introduces your buyer (even after your contract with that EA has ended).

So - here's two different examples (slightly simplified) :

1) You have a sole agency agreement with EA1

• If EA1 introduces an eventual buyer during their sole agency period, you have to pay them a fee

• It's a sole agency agreement, so you're not supposed to use any other EA at during the sole agency period. But if you're 'naughty' and use EA2 as well, and EA2 introduces an eventual buyer during EA1's sole agency period - as a 'punishment' you still have to pay EA1's fee.

2) You have a multi agency agreement with EA1 and EA2

• If EA1 introduces an eventual buyer during their multi agency period, you have to pay them a fee (and nothing to EA2).

• If EA2 introduces an eventual buyer during their multi agency period, you have to pay them a fee (and nothing to EA1)

Edit to add...

The main thing to ensure is that a specific buyer only ever deals with one EA.

E.g. If a buyer arranges a viewing with EA1, they should make any offers through EA1 (even after your contract with EA1 has terminated). They should not deal with EA2 at any point.

Otherwise, if the buyer arranges a viewing with EA1, then makes an offer through EA2 - you'll have to pay 2 lots of fees.

G_M

What is the start date? Let's assume 1st December 2018.


* You were tied in for 16 weeks ie till 23/3/19.
* after 23/3/19, the same contract continues, but you have the option to end it with 14 days notice

* you pay them if a buyer who is introduced during that 16 week period, or the following period until notice is served, Exchanges Contracts during that period, or within the following 6 months from the date notice is served.

* If a buyer is introduced by another agent after the 16 weeks and after 14 dys notice has been served, then no fee is payable.