Contract condition

[WeLead]

I'm wondering if this is standard? what exactly does it mean - i thought the vendor covered all agent fees?

cheers

Deposit Insufficient to Cover Agent Commission

The seller acknowledges the deposit held by the deposit holder is insufficient to cover the agents commission and hereby irrovacably authorises and directs the buyers solicitor to draw a separate cheque at settlement to cover the Agents Commission less any deposit held by the deposit holder

 

[Perp]

I'm wondering if this is standard? what exactly does it mean - i thought the vendor covered all agent fees?

cheers

Deposit Insufficient to Cover Agent Commission

The seller acknowledges the deposit held by the deposit holder is insufficient to cover the agents commission and hereby irrovacably authorises and directs the buyers solicitor to draw a separate cheque at settlement to cover the Agents Commission less any deposit held by the deposit holder

Yes, the seller = vendor, they are the same person. If you're the buyer/purchaser, it imposes no obligation on you.

e.g. You've paid $1,000 deposit, agent's commission is $6,000, this clause just authorises the conveyancing solicitor for the seller to pay the $5,000 balance of agent's commission to the agent, before paying funds to the seller.

 

[DaveM]

As above, you authorise payment for any shortfall from deposit to the agent directly from your funds disbursement from you/lender. Its so the vendor cant escape payment of sales commission. Its standard in low deposit deals. You are not paying the comms yourself.

 

[WeLead]

Great. thanks for the speedy replies.

If the contract went through under what circumstance could the vendor escape paying the sales commission?

 

[jerrybee]

Great. thanks for the speedy replies.

If the contract went through under what circumstance could the vendor escape paying the sales commission?

I've heard cases where they just refuse to pay and it's a nightmare for the agent. I also heard that's why some encourage higher deposits, so that they have a big chunk of cash sitting in their trust accounts should this happen. I don't know if the latter part is true though cause there are strict rules about accessing that money, even if they are morally right to do so.

 

[Terry_w]

Where is this special condition?

I would not agree with it as wtih a contract of sale you will be drawing cheques as directed by the vendor.

The vendor and the agent can contract for this sort of thing without dragging you into it. Imagine what could happen if your solicitor failed to do this.

 

[RPI]

It is a standard special condition in QLD created by the REIQ and the QLS to stop agents being nervous about low deposits. It means the agent gets paid. We see it in 90% of REIQ or ADL forms contracts.

 

[WeLead]

Thanks all. I went back and quizzed the agent about it too for clarification.