A salesperson's spouse bought a listed property without the vendor's consent on the prescribed form. The vendor decides to keep the sale, but the agency has already deducted commission from the deposit. What does s 134 say about the commission?
Correct Answer
A) No commission is payable, and the vendor can recover it as a debt.
Section 134(5) provides that no commission is payable on a contract made in breach of s 134(1) or brought about by work in breach of s 134(2), regardless of whether the client cancels. Section 134(6) lets the client recover any commission paid as a debt. A spouse is a related person under s 137(2)(d).
Why This Is the Correct Answer
Section 134(5)–(6): no commission on such a contract, and any paid is recoverable as a debt.
Why the Other Options Are Wrong
Option B: Commission is payable because the vendor kept the contract.
Section 134(5) says no commission is payable whether or not the client cancels the contract.
Option C: Half commission is payable because the spouse, not the salesperson, bought the property.
The Act has no half-commission rule; a spouse is a related person under s 137(2)(d).
Option D: Commission is payable if the price matched the agency's written appraisal of the property.
The price is irrelevant to s 134(5); no commission is payable on a contract made in breach.
Background Knowledge for Agency Practice
Source: https://www.legislation.govt.nz/act/public/2008/0066/latest/whole.html
Exam Tip for Agency Practice
Breach of s 134 costs the commission even if the sale stands.
Common Mistakes to Avoid on Agency Practice Questions
- •Assuming commission survives if the vendor keeps the sale.
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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