RES exam question on Regulation & the CEA Framework: Mr Chua signs a prescribed exclusive estate agency agreement for the sale of his flat…
Mr Chua signs a prescribed exclusive estate agency agreement for the sale of his flat, with a validity period of three months. In the second month he sells the flat himself to a colleague who never came through the agency, and refuses to pay the agency anything. What is the position?
- AHe owes nothing, as commission under an exclusive is earned only by the agency's introduction
- BHe owes nothing, as selling privately to a colleague ends the exclusive appointment at once
- CHe owes commission, and the agency could have set a six-month period had he agreed to it
- DHe owes commission, as an exclusive binds him for its term even when he sells himself
Show answer & explanation
Answer
D. He owes commission, as an exclusive binds him for its term even when he sells himself
Explanation
Answer: He owes commission, as an exclusive binds him for its term even when he sells himself. The second-month sale falls inside the validity period.Rule: During the validity period of an exclusive agreement, the client must pay the appointed agency commission even if he transacts through another agency or completes on his own. The period may not exceed three months, and once it lapses the client may renew or sign another agreement.Source: cea.gov.sg, estate agency agreements; Estate Agents (Estate Agency Work) Regulations 2010, Forms 5 to 8
Why the other options are wrong
- Nothing owed without the agency's introduction: Commission only on the agency's introduction is the non-exclusive position. Under an exclusive, commission is payable during the validity period even if the agency introduced nobody and he completes the sale on his own.
- Private sale ends the exclusive at once: A private sale does not end the appointment early.
- Commission owed, six months possible by agreement: A six-month period could not have been agreed, whatever Mr Chua wanted, because the cap is three months.
Study the concept behind this question: CEA Forms 1–8 Explained: Estate Agency Agreements & Commission
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