Under a sole agency agreement, when is the vendor still liable to pay commission to the agent?
Correct Answer
B) Whenever a sale happens during the agency period, whoever finds the buyer
Under a sole agency agreement, the agent is entitled to commission if any sale occurs during the agency period, regardless of who introduces the purchaser. This differs from other agency types where the vendor may sell privately without paying commission.
Why This Is the Correct Answer
A sole agency makes commission payable on a sale during the agency period whoever finds the buyer: the agent, another agency, or the vendor. That is the key difference from a general agency, under which a private sale by the vendor attracts no commission.
Why the Other Options Are Wrong
Option A: Only when the agent personally introduces the buyer who goes on to purchase
Requiring the agent to introduce the buyer describes a general agency; a sole agency pays on any sale during the term.
Option C: Only when the sale settles within 30 days of the agency agreement ending
Settlement timing after the agency ends is not the test; a sale agreed during the term attracts commission.
Option D: Only when a different real estate agency sells the property during the term
Sales through another agency do attract commission, but so do private sales by the vendor; 'only' makes this wrong.
Deep Analysis of This Agency Practice Question
A sole agency trades the vendor's freedom for the agent's security: one agency is appointed, and commission is payable on any sale during the term. The vendor may still sell privately or through someone else, but that does not cancel the sole agent's commission. The question is about when the sale occurs, not who found the buyer or when settlement happens.
Background Knowledge for Agency Practice
New Zealand vendor agencies are usually sole or general agencies. Under a general agency, commission is payable only to the agency that effects the sale and not on a private sale by the vendor. Under a sole agency, commission is payable on any sale during the term. A client can cancel a sole agency by 5 pm on the first working day after receiving a copy (s 130), and either party can cancel a residential sole agency longer than 90 days once 90 days have passed (s 131).
Memory Technique
Picture a sole agency as an umbrella over the term: any sale that happens under it pays the sole agent, whoever found the buyer.
When a sole agency question asks about commission, ask only whether the sale was made during the term.
Exam Tip for Agency Practice
Sole agency: commission on any sale during the term. General agency: commission only to the agency that sells.
Real World Application in Agency Practice
A vendor lists under a 90-day sole agency. At day 60 the vendor's neighbour's cousin contacts the vendor directly and buys. The sole agency is still owed its full commission because the sale happened during the term.
Common Mistakes to Avoid on Agency Practice Questions
- •Thinking a private sale by the vendor escapes commission under a sole agency
- •Thinking commission depends on who introduced the buyer during a sole agency
- •Focusing on the settlement date rather than when the sale was made
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?
- → 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?
- → A licensed real estate agent operates as a sole trader and employs two salespersons. One salesperson engages in misleading conduct during a property sale. Who bears primary legal responsibility for this conduct under the Real Estate Agents Act 2008?
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