A real estate company's sole agency expires on Friday. The agreement entitles it to commission on a later sale to any buyer it introduced during the term. On Thursday it introduces a buyer whose offer is declined; on Monday that buyer buys through another agent. What is the company's position?
Correct Answer
B) Commission under its agreement, because it introduced the buyer during the term
Whether commission is payable after a sole agency ends depends on the agreement. This one entitles the company to commission on a later sale to a buyer it introduced during the term, so the company has a claim even though the sale followed expiry. The vendor may also owe the second agent, which is why Rule 9.10 requires licensees to warn about double commission.
Why This Is the Correct Answer
Commission after expiry depends on the agreement's terms. This one entitles the company to commission on a later sale to a buyer it introduced during the term, so it has a claim. Rule 9.10 is why licensees warn vendors that signing with a second agent could leave them liable for two commissions.
Why the Other Options Are Wrong
Option A: No commission, because the sole agency had ended before the sale
The agreement expressly covers later sales to buyers introduced during the term, so expiry alone does not end the entitlement.
Option C: Half the usual commission, to be shared with the agent who wrote up the sale
Agencies may agree to share commission between themselves, but the vendor's liability to this company comes from its own agreement, not a statutory split.
Option D: Commission only if it lodged a written claim with the vendor within 48 hours of expiry
The 48-hour period in section 126 concerns giving the client a copy of the agency agreement, not lodging commission claims.
Deep Analysis of This Agency Practice Question
The question turns on contract, not a free-standing rule. Many New Zealand agency agreements protect the agency for buyers it introduced during the term, and Rule 9.11 requires an agent, when an agreement is cancelled, to give the client in writing the names of customers it would claim commission on. Where the vendor then sells through another agency to one of those buyers, both agencies may have a claim, which is the double-commission risk Rule 9.10 requires licensees to explain.
Background Knowledge for Agency Practice
Section 126 of the Real Estate Agents Act 2008 makes commission depend on a written agency agreement signed by the client and agent, with a copy given to the client within 48 hours. New Zealand vendor agencies are usually sole or general agencies. Rules 9.10 and 9.11 deal with the risk of the vendor owing more than one commission.
Memory Technique
A buyer introduced during the term who buys after it ends: read the agreement's post-expiry clause before deciding anything.
Use it whenever a question has a sale shortly after an agency ends to a buyer the agency found.
Exam Tip for Agency Practice
After an agency ends, commission turns on the agreement's post-expiry terms and who introduced the buyer, not on the expiry date alone.
Real World Application in Agency Practice
An agency's sole agency ends on Friday; it had shown the house to a couple on Thursday. On Monday the couple buy through another agency. Because the first agency's agreement covers buyers it introduced during the term, it claims its commission, and the vendor faces a possible second claim from the other agency.
Common Mistakes to Avoid on Agency Practice Questions
- •Assuming commission always ends on the expiry date
- •Assuming the law splits commission between competing agencies
- •Confusing the 48-hour copy rule in section 126 with a claims deadline
Related Topics & Key Terms
Key Terms:
More Agency Practice Questions
A real estate agent receives two offers on a property at the same time. What is their primary obligation?
Which of the following situations would create a conflict of interest requiring disclosure by a real estate licensee?
Sarah is a licensed salesperson working for ABC Real Estate. When showing a property to buyers, who does she primarily represent?
Under the Real Estate Agents Act 2008, what is the primary duty that a real estate agent owes to their client?
Which licence allows a person to carry out real estate agency work for an agent, but only under supervision?
- → Under section 126 of the Real Estate Agents Act 2008, what must happen after the client signs an agency agreement for the agent to be entitled to commission?
- → A licensed agent discovers that their salesperson has been providing advice about tax implications of a property investment without appropriate qualifications. What is the agent's responsibility?
- → An agency agreement contains a clause stating that the agent's commission is payable even if the property is sold by the vendor directly to a buyer introduced by the agent during the agency period, but the sale settles after the agency expires. Is this clause enforceable?
- → What must a real estate agent disclose to a potential purchaser when showing a property?
- → Under a sole agency agreement, when is the vendor still liable to pay commission to the agent?
- → Sarah holds a salesperson's licence and works for ABC Real Estate. When presenting an offer to a vendor, who is legally responsible for ensuring all disclosure obligations are met?
- → A real estate agent discovers that a property has a leaky roof after the agency agreement is signed but before any offers are received. What is the agent's obligation?
- → Which of the following allows an agent to end an agency agreement before its expiry date?
- → Under the Real Estate Agents Act 2008, what is the primary fiduciary duty that a real estate agent owes to their client?
- → What must a licensee do when they become aware of a material defect in a property they are marketing?
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