In buying, selling, or leasing real estate, a commission is the compensation that the property owner or employer agrees to pay the broker who helps coordinate until a contracting party is found. However, many people still have doubts about when the broker is entitled to receive the commission and to what extent the duties must be performed to be considered legally completed.
A commission is the compensation that the employer agrees to pay the broker in exchange for performing the duties of contacting, coordinating, or introducing the buyer and seller to meet, leading to the execution of a purchase, sale, lease, or agreed transaction. It may be set as a fixed amount or calculated as a percentage of the transaction value as agreed by the contracting parties.
The broker's duties are to find and recommend contracting parties who are ready and match the employer's requirements, including providing information about the property, coordinating appointments, and facilitating negotiations so that both parties can agree to a contract.
According to the law, the broker is entitled to receive a commission when the contract arises from the broker's introduction or management. If the sale or lease occurs due to the broker's actions, it is considered that the duties have been completed, and the broker has the right to receive the commission according to the law or the agreement of the contracting parties.
The fact that the buyer and seller agree to cancel the contract afterward does not necessarily mean that the broker loses the right to receive the commission. The broker's rights must be considered based on the time the rights arise, the agreement between the parties, and the reason for the contract cancellation.
If the broker has performed duties leading to the buyer and seller successfully entering into a contract, the right to receive a commission usually arises, even if later both parties agree to terminate the contract or cancel the sale themselves. Such cancellation does not affect the broker's rights that have already arisen unless otherwise agreed.
If the contract is not made or it cannot be proven that the sale resulted from the broker's actions, the broker may not yet have the right to claim a commission. Additionally, if the brokerage contract stipulates that the transfer of ownership or full payment must be completed before receiving the commission, the conditions must be followed accordingly.
Courts often consider whether the broker has facilitated or arranged in a way that caused the contract to be made, including reviewing the terms of the brokerage contract, the circumstances of the parties, and the reasons for contract cancellation to determine whether the broker still has the right to receive the commission.
Although brokers play an important role in connecting buyers and sellers, the right to receive a commission arises only when it can be proven that the transaction occurred through the broker's actions and according to the agreed conditions. Therefore, in some cases, the broker may not be entitled to a commission.
If the broker cannot present a contracting party that meets the conditions set by the employer or cannot find a buyer or seller ready to make a transaction, it may be considered that the broker's work has not been successful.
In cases where the transaction fails due to the broker's error, negligence, or providing incorrect information, the right to receive a commission may be forfeited.
If the broker does not comply with the conditions specified in the contract, such as not following the prescribed procedures or violating important agreements, the contracting parties may refuse to pay the commission.
In practice, if the broker cannot provide evidence of work performed, such as contacts, presentations, or coordination, it may be difficult to prove the right to claim a commission.
In practice, it is often found that buyers and sellers attempt to cancel contracts or make new agreements to avoid paying commissions to intermediaries. This issue can be considered based on the intention and facts of the transaction.
For example, a broker introduces a buyer to a seller and they agree on a price, but later both parties claim to cancel the original contract and make a new contract themselves without going through the broker to avoid paying the broker's fee.
If the contract cancellation has no genuine business reason but is intended to evade paying commission, the court may consider this an act of bad faith and may still regard the broker as entitled to the commission since the success of the sale resulted from the broker's efforts.
In cases where the contracting parties use information or business opportunities originating from the broker to make contracts themselves later, even without directly involving the broker, it may still be considered a consequence of the broker's role, entitling the broker to claim commission based on fairness and the circumstances of the case.
The consideration of whether a broker is entitled to receive a commission does not only look at the result of the transaction, but also must consider the circumstances, evidence, and various agreements involved to prove that the broker actually caused the contract to be made.
The agreement in the brokerage contract is the most important factor, as it sets the conditions for paying the commission, such as requiring the contract to be made, the transfer of ownership, or the proportion of compensation.
The broker appointment letter serves as evidence confirming the relationship between the employer and the broker, helping to clearly specify the scope of duties and rights in operations.
Introduction evidence, such as messages, emails, or presentation documents, helps prove that the broker was the one who facilitated the meeting of the contracting parties.
Participation in negotiation, price bargaining, or coordination between buyer and seller is another factor reflecting the broker's role in making the deal happen.
Contact evidence, such as chats, appointments, or communication records, can be used to consider whether the transaction arose from the broker's connection.
The cancellation of a real estate sale or lease contract can occur for various reasons, such as changes in financial conditions or agreements not meeting expectations. However, contract cancellation should be carried out carefully to prevent disputes, especially regarding brokerage fees that may arise later.
Sellers should start by thoroughly reviewing the brokerage fee conditions in the brokerage contract to see if there are any remaining obligations. Then, they should officially notify the broker when canceling the contract for transparency and to reduce misunderstandings, as well as keep evidence of the cancellation, such as a contract cancellation letter or confirmation messages from the contracting party, to use as evidence in the future.
Buyers should check the reason for the contract cancellation to determine what problem caused it and whether it relates to the original conditions. Then, they should make a written agreement on the cancellation to prevent discrepancies and be cautious about potential disputes over brokerage fees that may arise if new transactions occur later.
Brokers should prepare a clear brokerage contract from the beginning, specifying the conditions for receiving compensation in detail, including keeping evidence of all work steps, such as communications, appointments, and property presentations, to confirm their rights. Additionally, they should set strict conditions for receiving brokerage fees to reduce the risk of being avoided payment in the future.
In practice, disputes over commissions often arise when the purchase or rental of real estate is complex or when terms change along the way, causing uncertainty as to whether the agent is entitled to a commission. Consideration must therefore rely on the facts of each case.
For example, if the agent introduces the buyer to the seller and helps negotiate until both parties agree to a sales contract successfully, even if some details are later changed or the original contract is canceled, if it can be proven that the contract was made due to the agent's actions, the agent is still considered entitled to a commission.
This usually occurs when the sale is not completed or the contracting parties did not decide to transact directly based on the agent's introduction, such as when the buyer and seller meet on their own without the agent's involvement or there is no evidence confirming the agent's referral, which may result in the agent not being entitled to claim a commission.
In some situations, the facts may be unclear, such as claims that the agent made the introduction but there is insufficient evidence, or a new contract is made after the original contract is canceled. In such cases, the court may need to consider all circumstances to determine whether the agent is entitled to a commission based on fairness and relevant laws.
The cancellation of a contract between the buyer and the seller does not automatically mean that the agent loses the right to receive a commission, as the agent's rights depend primarily on the facts of each case, including the conditions specified in the agency contract and evidence proving that the agent was the one who facilitated or acted until the purchase or lease agreement was made.
If the agent has fully performed their duties resulting in the parties making an agreement, even if the contract is later canceled or the terms are changed, the right to receive a commission may still remain. However, if there is insufficient evidence or the agent's role cannot be clearly proven, it may result in the termination of the right to claim the commission.
Therefore, before proceeding with contract cancellation, all parties should carefully review the conditions, and if there is a dispute regarding the commission, they should consult legal experts to find an appropriate and fair resolution for all parties.
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Generally, if the broker has performed their duties to the point that the buyer and seller have reached an agreement, the right to receive a commission may arise even if the buyer later withdraws. However, this must be considered according to the terms of the brokerage contract and the facts of each case.
If the broker is the one who points out the opportunity and causes the agreement to buy and sell, and then the seller changes their mind and does not sell, there may still be an obligation to pay the broker's fee. However, if no agreement has been reached or the contract has not yet been made, the right to receive the broker's fee may not arise.
The cancellation of the contract afterwards does not automatically revoke the broker's rights. If it can be proven that the contract was made as a result of the broker's actions, the right to claim the brokerage fee still exists.
Can be called in some cases if there is other evidence proving that there was an agreement to hire and the broker has performed duties successfully, such as chat, email, or witnesses
If it can be proven that the transaction was initiated or introduced by the broker, even if the parties later make a contract on their own, the broker may still have the right to claim a commission based on fairness and the circumstances of the case.
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