Estate Agency Agreements & Commission (CEA Forms 1–8)

Before a salesperson markets a single listing, one document should already be signed: the estate agency agreement. It is the contract between the client and the estate agency that sets out the scope of work, the commission, the duration, and any conflict of interest. CEA prescribes the wording under the Estate Agents (Estate Agency Work) Regulations, and its Practice Guidelines on the Use of Prescribed Estate Agency Agreement Forms 1–8 (PG 1/2011) govern how the forms are filled in. This is dense, rule-heavy Paper 2 material — and exactly the kind the exam likes, because every detail is a testable fact.

Keep two documents apart from the start. The estate agency agreement is between the client and the agency — it is about *appointment and commission*. The Option to Purchase is between the seller and the buyer — it is about *the property*. Candidates lose marks by blurring them.

The eight prescribed forms

There are eight forms, covering four residential situations in two flavours. Forms 1–4 are the non-exclusive agreements; Forms 5–8 are the exclusive versions of the same four:

• The forms cover residential property. Where no prescribed form applies to the work, none need be used — CEA's own example is a tenant appointing an agent to find a replacement tenant.
• Where a prescribed form does apply and the agency does not use it, its right to claim against the client is affected under section 44 of the Estate Agents Act — in plain terms, the agency may be unable to enforce its commission.
• The applicable form may be signed even where the client pays no commission (e.g. the agent is paid by the other side).
• Not signing a form does not strip away the agent's duties — the obligations under the Act, the Regulations and common law (including disclosing a conflict of interest) still bind them.
• CEA does not prescribe *when* the agreement must be signed: it may be entered into any time before or at the same time as the transaction, depending on the agency's practice.

Exclusive vs non-exclusive — and the 3-month cap

That middle row is the sharpest point on this page. An exclusive agreement is a time-limited appointment: CEA caps the validity period at three months, and extending an exclusive beyond the permitted period has drawn disciplinary action. The client is free to renew once it lapses — but the salesperson must explain the meaning and consequences of signing an exclusive, and give the client adequate time to read it, before the client commits. (Confirm the current permitted period with CEA.)

Commission — negotiated, and paid to the agency

• CEA does not fix commission rates. The amount is subject to negotiation between the client and the agency, and should be agreed before work starts.
• GST: the form carries a Yes/No box for whether the agency is GST-registered, and states whether the commission specified is inclusive or exclusive of GST. Only a GST-registered business may charge and collect GST.
• Commission is paid to the estate agency, not to the salesperson personally. The agency then pays the salesperson.
• Never from both sides. An agent must not collect commission from more than one party in the same transaction — that is an offence, and it is how the dual-representation ban bites in practice.
• HDB carve-out: for the sale, purchase or lease of HDB property the agent must assess the client's eligibility. If completion falls through because the client was ineligible under HDB rules, the client owes no commission — a favourite exam scenario.

Co-broking and conflicts of interest

• Co-broking — two or more agencies or salespersons involved in the same transaction — is a matter for negotiation with the client, and the agreement records whether it is allowed. The salesperson must properly explain and advise on it.
• The "no co-broking" option must not be used to shut out co-broking merely because the salesperson is jointly marketing with someone, or has pre-identified who he is willing to co-broke with. That subordinates the client's interest to the agent's.
• Co-broking does not unlock dual representation. Whether or not the client authorises co-broking, a salesperson may not represent — or take commission from — both parties. Doing so in substance is a breach even if it is masked by nominally putting another salesperson on the other side.
• Dealing with an unrepresented other party? You must make sure they know you do not act for them and are not under the impression you will protect their interests.
• Conflicts must be disclosed in writing in the agreement — e.g. the other party's salesperson is with your own agency, or is married or related to you; the other party is a friend or family member; or you are receiving a fee, reward or benefit from the other side.
• If the conflict surfaces later, disclose it immediately in writing. You may continue acting only if the fully-informed client consents in writing — which may be on a separate sheet referring to the agreement.

Filling in the form: the mechanical rules

• Additional Terms that will not fit go on a separate sheet of pink paper, in black ink, in a font no smaller than the prescribed terms. The original the client signs must be on pink paper; photocopies need not be.
• Additional Terms must not conflict with, vary or limit the prescribed terms. Legitimate examples: compensating the agency where an exclusive seller unreasonably refuses to sell after substantial effort, or giving the agency a share of a forfeited option deposit.
• Never cancel a prescribed clause. Amendments may be made only to the Additional Terms or to the blanks and choices — and every amendment must be initialled by the parties and dated.
• No pre-typing of anything that is meant to be negotiated with or chosen by the client. The agency's name, licence number and address (and its logo) may be pre-typed.
• The client must be given a copy of every document he signs — immediately, or as soon as possible after signing.