If I sell to the tenant do I have to pay the managing agent a fee?

Looking for some of the legal minds around PC to chip with any sort of idea.

We're going to sell our Sydney PPoR that is now an investment property. In March the tenant vacated and a new tenant moved in. Then, in April, the managing agent sold his business to another real estate agency who we signed a new management agreement with. We have never signed any agreement with any agent specifically regarding selling the property. Though to be completely honest I do not know if there is some sort of clause in the management agreement about any obligations we have if we were to sell the property. That's something I will have to look into.

Assuming there is no such clause in the management contract, if I were to offer the place for sale directly to the current tenant and they wanted to buy, is there likely to be any legal obligation on our part to pay any commission to the current management agency?

 

Probably not. Where would the obligation come from then?

 

Read the legal management agreement you signed.
Some agree for the RE agent to charge commission if you sell to a current or previous tenant introduced by the agency.
If this clause was included (and you did not delete it), you will be legally liable to pay the commission.
Marg

 

No. They have to be the “effective cause of sale”.

 

Thanks for the replies. I will go over the management agreement with a magnifying glass to be sure there are no hidden clauses. Otherwise, it's good to know there isn't some sort of unwritten law precedent kind of thing that would be a play.

 

No, its not unwritten, it is case law - see Emmons Mt Gambier Pty Ltd v Specialist Solicitors Network Pty Ltd [2005] NSWCA 117.

 

Ok, my simple reading of that case seems to indicate that the agent must be the one who facilitates the eventual sale and not just the person who made the introduction.

The current agent did not even make the introduction as the tenant was found by the previous agent. Furthermore, neither the previous agent or the current agent would be facilitating the sale or getting a higher price or anything like that. So, again assuming no hidden clause in my management agreement, it's unlikely any commission would need to be paid.

Of course, this is all theoretical as I have no idea if the tenant would want to or is in a position to buy. Just all thought bubbles at this stage.

Thanks for the help.

 

When the present agent purchased the rent roll, previous rights may have been included. So the fact that the previous agent installed the tenant may not exclude the present agent from any other ongoing benefit.

A careful read of the agreement you signed will answer your questions. Until proven otherwise, it is safest to assume that any clauses refer to both the present agent and the previous one.
Marg

 

Yes, good point!

 

Yes, the agent would make a claim for commission. No, if taken to court, the court would probably not grant the agent any commission.

Some examples here: Agents commissions and fees case studies