Paper 2 · Regulation & the CEA Framework
CEA Forms 1–8 Explained: Estate Agency Agreements & Commission
Must-know for the exam
- The estate agency agreement between client and estate agent covers appointment and commission; the Option to Purchase between seller and buyer covers the property.
- CEA prescribes eight forms under the Estate Agents (Estate Agency Work) Regulations for residential property: Forms 1–4 are non-exclusive, Forms 5–8 are exclusive.
- The four situations are sale (Forms 1/5), purchase (Forms 2/6), lease by a landlord (Forms 3/7) and lease by a tenant (Forms 4/8).
- Not using an applicable prescribed form affects the estate agent's right to claim against the client under section 44 of the Estate Agents Act; where none applies, none is needed.
- An exclusive agreement cannot exceed 3 months; during it the appointed estate agent earns commission even if the client transacts through another agent or closes the deal himself.
- CEA does not fix commission rates; commission is negotiated before work starts and is paid to the estate agent, never to the salesperson personally.
- A salesperson must never collect commission from more than one party
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:
| Situation (residential property) | Non-exclusive | Exclusive |
|---|---|---|
| Sale — you act for the seller | Form 1 | Form 5 |
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Practise Regulation & the CEA Framework questions →Exam-style questions on this topic
- RES exam question on Regulation & the CEA Framework: A seller is choosing between an exclusive and an open listing
- RES exam question on Regulation & the CEA Framework: A newly licensed agency is setting up and registering its salespersons
- RES exam question on Regulation & the CEA Framework: activities constitutes "estate agency work" requiring CEA registration
- RES exam question on Regulation & the CEA Framework: A newly registered salesperson considers his obligations
- RES exam question on Regulation & the CEA Framework: A salesperson's annual registration comes up for renewal
Common questions
- What are CEA's prescribed estate agency agreement Forms 1 to 8?
- They are the standard agreements prescribed under the Estate Agents (Estate Agency Work) Regulations for residential property work. Forms 1 to 4 are the non-exclusive agreements for a sale, a purchase, a lease by a landlord and a lease by a tenant. Forms 5 to 8 are the exclusive versions of the same four situations.
- How long can an exclusive estate agency agreement last?
- A prescribed exclusive estate agency agreement's validity period cannot exceed three months. Once it lapses the client is free to renew it or sign a fresh agreement. Extending an exclusive beyond the permitted validity period has led to CEA disciplinary action, so confirm the current position with CEA.
- Does CEA fix property agent commission rates?
- No. Commission is subject to negotiation between the client and the estate agency, and should be agreed before work begins. The agreement also records whether the agency is GST-registered and whether the stated commission is inclusive or exclusive of GST — only a GST-registered business may charge GST. Commission is paid to the agency, not to the salesperson personally.
- What happens if an agency does not use the applicable prescribed form?
- Its right to claim against the client is affected under section 44 of the Estate Agents Act, so it may be unable to enforce its commission. The agency and salesperson nonetheless still owe the client all their duties under the Act, the Regulations and common law — including disclosing any conflict of interest.
- If the client authorises co-broking, can the salesperson act for both sides?
- No. Co-broking and dual representation are different things. Whether or not co-broking is authorised, a salesperson cannot represent both parties or collect commission from more than one party in the same transaction — and doing so in substance is a breach even if another salesperson is nominally placed on the other side.
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