An agency receives a volume rebate from a property-listing website on the marketing it charges vendors for, but its agency agreement says nothing about the rebate. The vendor pays the commission but refuses to pay the marketing costs. Who is right under s 128?
Correct Answer
D) The vendor, as the agency cannot recover expenses without the rebate statement.
Section 128(1) says an agent is not entitled to any expenses from a client unless the agency agreement contains a statement identifying the source of all rebates, discounts or commissions the agent will or may receive on those expenses and their estimated amount. The Real Estate Agents (Duties of Licensees) Regulations 2009 prescribe Form 1 for this statement.
Why This Is the Correct Answer
Without the s 128 statement in the agency agreement, the agent has no entitlement to expenses.
Why the Other Options Are Wrong
Option A: The agency, because rebates only need disclosing if the vendor asks about them first.
Section 128(1) requires the statement in the agency agreement whether or not the vendor asks.
Option B: The agency, because s 128 only affects commission and has no effect on marketing expenses.
Section 128 is about expenses: without the statement the agent is not entitled to any expenses.
Option C: The agency, as long as it passes the rebate on to the vendor after settlement.
Section 128 requires the rebate statement to be in the agency agreement itself; passing the rebate on later does not restore entitlement to expenses.
Background Knowledge for Agency Practice
Source: https://www.legislation.govt.nz/act/public/2008/0066/latest/whole.html
Exam Tip for Agency Practice
Rebates on vendor-paid marketing must be named and estimated in the agency agreement.
Common Mistakes to Avoid on Agency Practice Questions
- •Believing rebate disclosure is optional or only affects commission.
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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