An exclusive agency agreement expires, but the property sells to a buyer who first inspected during the agency period. Who is entitled to commission?

Q: What is the correct answer to: An exclusive agency agreement expires, but the property sells to a buyer who first inspected during the agency period. Who is entitled to commission?

The correct answer is The original agent, if there's an appropriate clause in the agency agreement. Option B is correct because exclusive agency agreements commonly include tail clauses or protection periods that specifically address this scenario. These clauses typically state that if a property sells to a buyer who was introduced to the property during the agency period, the agent remains entitled to commission even after the agreement expires. The enforceability depends on the specific wording and terms within the agency agreement, making the phrase 'if there's an appropriate clause' crucial to the answer.

Q: What background knowledge is needed for this Agency Practice question?

Tail clauses (also called protection periods or holdover clauses) are contractual provisions in agency agreements that protect agents' commission rights after agreement expiry. Under Australian Consumer Law, these clauses must be clearly disclosed and explained to vendors. They typically apply when properties sell to buyers who were introduced during the agency period, usually within 30-90 days after expiry. The enforceability depends on proper disclosure, reasonable timeframes, and clear identification of protected buyers. State legislation governs agency agreements, with specific requirements varying between jurisdictions, but the principle of protecting agents' legitimate interests in buyers they introduced is widely recognized across Australia.

Q: What is a good way to remember the answer to this Agency Practice question?

Think of a dog's TAIL that follows behind: T-Time protected period, A-Agent who introduced buyer, I-In the original agreement, L-Legally enforceable clause. Just like a tail follows a dog even when it stops moving, commission rights can follow an agent even after the agency agreement stops. When you see questions about expired agency agreements and commission entitlements, remember the TAIL acronym. Check if there's a Time-protected period for the Agent who Introduced the buyer, written In the agreement as a Legal clause.

Q: What exam tip applies to this Agency Practice question?

Look for key phrases like 'appropriate clause', 'tail clause', or 'protection period' in agency questions. Remember that commission rights can survive agency expiry if contractually protected and the buyer was introduced during the agency period.

Q: How does this Agency Practice concept apply in Australian real estate practice?

Sarah lists her property with Agent John under an exclusive agency with a 60-day tail clause. During the agency period, John shows the property to the Smith family, but they don't make an offer. The agency expires, and two weeks later, the Smiths contact Sarah directly and purchase the property. Despite the expired agency, John is entitled to commission because he introduced the Smiths during the agency period and the tail clause protects his interests for buyers he brought to the property.

Question

Agency PracticeAgency AgreementsMEDIUM

An exclusive agency agreement expires, but the property sells to a buyer who first inspected during the agency period. Who is entitled to commission?

Answer Options

A

No one, as the agency period has expired

B

The original agent, if there's an appropriate clause in the agency agreement

C

Any agent involved in the final sale negotiations

D

The agent must share commission with any other agents involved