Standard 4 2014

4.1.0 INTRODUCTION

4.1.1 Estate agency fee or commission is based on the Seventh Schedule of the Rules.

4.1.2 In addition to the fees, the estate agent is entitled to claim, again in accordance with the Seventh Schedule of the Rules, costs of printing, plans, copies of documents, lithography, traveling, other expenses actually incurred, cost of media advertisements, signboards, brochures and other promotional materials.

4.1.3 Estate agency comes under the Law of Contract and estate agency fees are generally dependent upon the agency agreement between the firm and the client. It is thus important for the estate agent to always obtain written instructions from the client before the commencement of the estate agency assignment.

4.2.0 STATEMENTS OF STANDARD

4.2.1 The first rule in so far as estate agency fees are concerned is that it depends upon the terms and conditions of the agreement between the firm and the client.

4.2.2 When there is no agreement, written or otherwise, between the firm and the client then fees are generally due upon the creation of a binding contract between the parties to the estate agency transaction.

4.2.3 If the sale and purchase agreement or letting or leasing agreement is unconditional, the estate agency fee is due upon the signing of the sale and purchase agreement or letting or leasing agreement.

4.2.4 When the sale and purchase agreement or letting agreement or leasing is conditional, the estate agency fee is due when the last of the conditions are met i.e. when the agreement becomes unconditional.

4.2.5 Notwithstanding 4.2.4, the firm and the client may agree to vary from the general rule and agree to specific terms and conditions on payment of fees. Such an agreement must be in writing.

4.2.6 If the client to the Firm aborts the deal either after the signing of an unconditional Sale and Purchase Agreement or Letting Agreement or after a Conditional Agreement becomes unconditional, then the Firm is entitled to the full estate agency fee.

4.2.7 If the other party to the deal aborts and the Client to the Firm forfeit the deposit (paid by the prospective buyer) before the signing of the sale and purchase agreement, or letting or leasing agreement, the Firm is entitled to claim 50% of the full fee or 50% of the forfeited deposit whichever is the lower.

4.2.8 Where earnest deposit or rental deposit is paid and accepted by the Client and subsequently the transaction is aborted by the Client, before the signing of the sale and purchase agreement or letting agreement, where in the lease/letting, occupation has not taken place, the firm is entitled to 50% of its full fees plus all disbursements or 50% of the earnest deposit or rental deposit plus all disbursements, whichever is the lower.

4.2.9 Where a firm has been appointed/engaged and has been given an exclusive agency, the firm is entitled to its fees if any introduction made during the period of its appointment/engagement leads to a successful concluded sale or letting after the expiry of the appointment/engagement provided always it is within a reasonable period of time and the firm has records of written communication with its client where the client is aware of the introduction of that party during the period of appointment/engagement.

4.2.10 Where an exclusive agency has expired it is necessary for the firm to obtain a fresh appointment/engagement from its client as the previous appointment/engagement cannot be automatically renewed.

4.2.11 The computation of fees payable for any transaction shall be as per the Seventh Schedule of the Rules.

4.2.12 The firm may only deduct its fees from the earnest deposit or rental deposit from its client's account after the parties have signed the sale and purchase or letting or leasing agreement provided always that it is an unconditional agreement and the client has given prior written consent.

4.2.13 The firm may also claim for disbursements actually incurred by it during the course of its appointment/engagement and in furtherance of its service to the client, in accordance with the Seventh Schedule of the Rules provided always it is substantiated with supporting documents.

4.3.0 EXPLANATIONS TO THE STANDARD

4.3.1 Statement 4.2.11 would be in line with the common law on agency.

4.3.2 A binding contract shall be when a sale and purchase or letting or leasing agreement has been signed.

4.3.3 The term Agreement referred to in item 4.2.3 and inferred to in item 4.2.4 includes a written agreement to enter into a contract.

4.3.4 An example of an unconditional agreement is where no approvals are required from the Foreign Investment Committee, the Securities Commission, State Excos, shareholders or other relevant authorities or bodies.

4.3.5 Determining Sales Consideration

In determining the fees for any sales which are not explicitly stated the following shall apply:-

(a) The firm shall be entitled to claim for fees based on the total sales consideration (in cash, company shares or in kind) which shall include sums paid for all assets and chattels including furniture, fittings and household appliances.

(b) In the case of property swap, the sales price shall be based on the agreed consideration or the market value whichever is the higher.

(c) In the case of a joint venture, the fees shall be based on the market value of the property or the joint venture consideration, whichever is lower at the date of the signing of the joint venture agreement.

4.3.6 Determining Rent

a) The term rent refers to the gross rent which is inclusive of:-

i) Service/maintenance charges.

ii) Furniture, fittings and household appliances that are rented together with the property.

b) First year's rent refers to the first 12 months' rent receivable by the landlord disregarding any rent-free period.

c) Where a premium is payable under the letting or lease, the amount of pro-rated premium shall be added to the rent for determining the fee payable.

Ref:

Verbatim from Standard 4 MEAS 2014.