In a sole agency agreement, what happens if the property is sold by another real estate agency during the agreement period?
Correct Answer
A) The sole agent is still entitled to its full commission under the agreement
Under a sole agency agreement, the appointed agent is entitled to commission if the property is sold by any real estate agency during the agreement period, regardless of who actually effects the sale. This protects the sole agent's exclusive marketing rights.
Why This Is the Correct Answer
A sole agency makes commission payable on any sale during the term. If another agency sells, the sole agent is still owed its full commission, and the vendor may owe the other agency too if the vendor signed with it, which is the double-commission risk Rule 9.10 requires licensees to explain.
Why the Other Options Are Wrong
Option B: The commission is split equally between the two agencies involved
No rule splits commission between agencies; the sole agent's entitlement comes from its own agreement.
Option C: The sole agent receives nothing, because a different agency found the buyer and sold
Under a sole agency, commission is payable on a sale during the term whoever effects it, including another agency.
Option D: The sole agent is paid only a reduced marketing fee rather than commission
Nothing in a standard sole agency converts the commission into a marketing fee when another agency sells.
Deep Analysis of This Agency Practice Question
A sole agency appoints one agency for a set term and makes commission payable on any sale during that term, whoever effects it. The vendor can still sell through someone else or privately, but that does not cancel the sole agent's commission. If the vendor has also signed with the agency that sold, the vendor may owe that agency too, which is why Rule 9.10 requires licensees to explain the double-commission risk.
Background Knowledge for Agency Practice
New Zealand vendor agencies are usually sole or general agencies. A sole agency appoints one agency and makes commission payable on any sale during the term; a general agency lets the vendor appoint several agencies and pays only the one that sells. 'Exclusive agency' is not a New Zealand category. Rule 9.10 requires licensees to explain that a vendor who signs more than one agency agreement could pay full commission to more than one agent.
Memory Technique
Sole agency: any sale in the term pays the sole agent. Signing with a second agency does not cancel that; it just risks a second bill.
When another agency or the vendor sells during a sole agency, the sole agent is still owed commission; then ask whether the vendor also owes someone else.
Exam Tip for Agency Practice
A sale during a sole agency pays the sole agent, whoever sold it; the vendor may owe a second commission if they also signed elsewhere.
Real World Application in Agency Practice
A vendor signs a 90-day sole agency with one agency, then at day 60 also signs with a second agency, which finds a buyer. The first agency is owed its full commission under the sole agency, and the second may also claim under its own agreement, leaving the vendor with two commissions.
Common Mistakes to Avoid on Agency Practice Questions
- •Confusing sole agency with general agency commission rules
- •Thinking commission must be split when another agency effects the sale
- •Believing the sole agent loses rights if they don't personally complete the sale
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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