Forum: CEA’s Prescribed Estate Agency Agreements provide clarity on services and commission
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We refer to the Forum letter by Mr Teo Kiong Ming (“ Review clause for lease renewal commissions in property agency agreements
The Council for Estate Agencies (CEA) publishes the Prescribed Estate Agency Agreements on our website for the convenience of consumers who wish to engage a property agent to help them with their property transactions. These agreements act as a binding contract between a consumer and the property agent. They provide clarity on the services to be provided by the property agent and the commission payable by the consumer.
Under CEA’s Prescribed Estate Agency Agreement for the Lease of Residential Property by a Landlord, clause 4(d) provides for the landlord to indicate if he or she would like to engage the same property agent for the renewal of a lease, and if so, to indicate the amount of commission payable to the agent. The engagement of the property agent for the lease renewal is optional for the landlord and the amount of commission payable is negotiable with the agent.
Mr Teo’s understanding is correct that a property agent’s role in estate agency work for rental transactions ends after the landlord and tenant have signed the tenancy agreement and the property is handed over to the tenant. Property management work that some agents perform on behalf of the landlord during the tenancy, such as arranging for plumbing works or repairs to faulty appliances, is not estate agency work and not regulated by CEA.
If a landlord wishes to renew the lease with the same tenant upon lease expiry, the renewal is considered a fresh lease. At lease renewal, a property agent would have to conduct estate agency work again, such as drafting a new tenancy agreement in line with the landlord’s wishes, negotiating on the new rental rate, and doing the necessary due diligence checks on the tenant. The agent is allowed to charge a commission for this work.
We advise consumers to ask their agents to explain the clauses in the Prescribed Estate Agency Agreement and to only sign the agreement after understanding all clauses, including the commissions payable.
We have contacted Mr Teo to clarify the above.
Kelly Ng
Director, Policy & Professional Development
Council for Estate Agencies
