Josephine is the daughter of Auntie Wong who has co-broked a bungalow house costing RM1 mio. She asks you as a REA whether her mother's share of commission amounting to half of the total commission (1% of agreed 2% commission paid by Vendor) could be recoverable as now the partner of her mother had been reported to the authorities by the buyer.
Apparently, the buyer felt that he has been cheated.
A. (Repost from my-realproperty2.blogspot.com)
The law which is involved here has two parts. First is assuming Auntie Wong's partner is a REA, and second part is if the commission of 1% due to Auntie who is unlicensed broker, could be recovered.
Firstly, as REA is recognised in the Valuers, Appraisers and Estate Agents Act, 1981 Act 242, as in Section 22B and Section 22C, to practice Estate Agency, recovering the fees by the REA is spelled out pursuant to S.22C (1) (d) as extracted below.
S.22C (1) (d) be entitled to recover in any court any fees, commissions, charges or remuneration for any professional advice or services rendered as an estate agent.
Auntie Wong's partner - who is a REA, can recover the commission in total of the agreed 2% from the Vendor, or any such agreed fee or percentage as in the engagement and appointment letter. This can be a written document or by expressly agreed as it is a binding contract, as in Contracts Act, 1950:-
S.9 Promises, expressed and implied.
So far as the proposal or acceptance of any promises is made in words, the promise is said to be express. So far as the proposal or acceptance is made otherwise than in words, the promise is said to be implied.
And meaning of contract as in-
S.10 What agreements are contracts.
(1) All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.
(2) Nothing herein contained shall affect any law by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents.
Therefore, even if it was not written, not witnessed and not registered, it was a strong binding contract.
Assuming that there were not vitiating factors like lack of consent, where S.14 CA'50 and S.15-18 below is caused:
S.15 Coercion
S.16 Undue influence
S.17 Fraud
S.18 Misrepresentation
Which leads to S.19 Voidability of agreements without free consent,
(1) When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.
that the contract can be voidable. Otherwise, it was a good contract. And, the REA was acting in the normal course of business as an estate agent, closing the deal and deserved to be paid accordingly.
However, it is mentioned in the question that the buyer felt cheated and thus taking action against the Vendor. In this case the buyer is probably using such elements of argument in fighting this case in court.
Following the Malaysian Estate Agency Standard 4 (MEAS 4), an unconditional contract (assuming this is the case here),
4.2.3 If the sale and purchase agreement or letting or leasing agreement is unconditional, the estate agency fee is due upon the signing of the sale and purchase agreement or letting or leasing agreement.
The commission 2% is due to the agent the moment SPA is signed. So, in this case, assuming that the SPA has already been signed, and the agent has transferred the money to the Vendor's lawyer the earnest deposit from the client's account, the commission is due any time.
Based on S.22C (1) (d), auntie Wong's partner - a REA, is entitled to recover that sum from the lawyer who deals with the Vendor's SPA, if the Vendor does not want to pay.
Auntie Wong's partner can send a letter of request to the lawyer dealing with the SPA requesting that the sum equivalent to 2% of the transacted price be retained as commission invoking section 22C (1)(d) at the conveyancing lawyer's office. The lawyer has to retain that payment, as the law says so, and not pay the Vendor the total sum transacted. There are other things which the lawyer also need to make sure, example the real property gains tax 'Borang CKHT'.
As for auntie Wong's share of 1%, she has no rights to the share of commission according to the law. In fact, both auntie Wong and her partner will get into trouble with the enforcement of the Board on two charges.
1. Section 24 of VAEA Act, 1981 (REA)
2. Section 30 of VAEA Act, 1981 (REA & Auntie Wong)
S.24 (1)(h) can be imposed on the REA who employ or partner with an unauthorized person in practicing estate agency. Unless the person is registered as REN and complied with the Board's requirements. One of which is auntie Wong's name be recorded in the Register of Negotiators of the firm, and been issued a REN Tag.
(h) has allowed any unauthorized person to carry on valuation, appraisal or estate agency business in his name; or
which he is liable for disciplinary action by the Board, in the below manners-
(i) cancelling his registration
(ii) suspending his practice
(iii) admonishing him and recording in register
(iv) admonishing him and impose a fine not exceeding RM10,000
(v) imposing a fine not exceeding RM25,000 and suspending him
(vi) prohibiting him for re-instatement if he has been cancelled or suspended.
2. S.30 (1) (g) and S.30 (1) (j) on REA, and S.30 (2) (a) and S.30 (3) onto aunti Wong.
S.30 (1) (g) sells, transfers, sublets or otherwise permits any other person to use any authority to practise issued to him under this Act;
S.30 (1) (j) aids and abets in the commission of an offence under this Act,
and,
commits an offence and is liable on conviction to a fine not exceeding RM300,000 or to imprisonment for a term not exceeding 3 years or to both and he shall be liable to a further penalty of RM1,000 for each day during the continuance of such offence.
S.30 (2) Any person [including auntie Wong] who, without any lawful authority [which is the case with auntie Wong],
(a) acts as a valuer, appraiser or estate agent for any party or acts in any capacity as a valuer, appraiser or estate agent whether the primary or principal object of his business is valuation, appraisal or estate agency or whether any incidental part of his business is valuation, appraisal or estate agency; or
(b) wilfully or falsely pretends to be, or takes or uses any name, title, addition or description implying that he is duly qualified or authorized to act as, a valuer, appraiser or estate agent, or that he is by law so qualified or authorized,
commits an offence and is liable on conviction to a fine not exceeding RM300,000 or to imprisonment for a team not exceeding 3 years or to both.
And, as she is not authorized, she is to be subject to S.30 (3) below.
(3) No costs, commission, fee, reward or any other consideration in respect of anything done by an unauthorized person in respect of any act which is an offence under subsections (1) or (2) shall be recoverable in any court.
Therefore, the REA would be taken to be implicated for the disciplinary action of abetting auntie Wong if he were to share his commission with her. This is also governed by Rule 91 of Valuers, Appraisers and Estate Agents Rules, 1986.
91. Participation of others in profits.
(1) No registered estate agent shall, directly or indirectly, allow or agree to allow participation by any other person, not being a registered valuer, appraiser or estate agent, who is permitted to practice estate agency, in the profits of his professional work in agency fees or in commissions.
(2) Notwithstanding paragraph (1), a registered estate agent may pay a commission to a member of his staff who is under his control or supervision in the aggregate not exceeding forty percent (40%) of the professional fee in a particular transaction.
Thus, if auntie Wong is a REN under this REA, he can share the commission of 2% with auntie Wong at maximum of 40% - NOT 50%!
Ref:
Various sections of VAEA Act, 1981 and Rules or Rules, 1986.
MEAS 4 - Fees.
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