Tom Panos 00:00
Listen, let me tell you, everyone in real estate needs a Jamison Fisher on their side accountants and lawyers to the industry. By the way, I don’t even get a single cent. I am an ambassador of a few tech firms, but this is purely a recommendation on their service that they give to clients. And today, lisa, I want to talk to you about a solid agency agreement so agents can keep the commission when it’s sold. I have had a client very recently who had to actually not because he had an incomplete agency agreement, and it was one small issue that made the agreement invalid. And I said to him I said, oh, did you get fined? He goes, mate, he goes. The fine was the least of my issues. The issue is my $40,000 commission. He goes. I’ve done everything perfect, except one small section on the agreement and I want to talk about that I want to talk about. Agents also need to be very clear about how and when VPA is to be collected from.
Lisa Jemmeson 01:07
She listed and you get the contract in. That comes to market. And I spoke to Tom and Susan last week about this because I had two calls from agents on the same day and they done all that. They listed it, they marketed it. There was VPA payable on settlement, so they’d funded it along the way.
And it’s coming up to settlement and the solicitor, with prior to settlement, sends over an authority from them and from the purchase of solicitor saying release the deposit. No, it’s held in trust. And the call to me is do I have to release it? And my answer is yeah, if you’ve got a authority of both parties, that money is in trust for both. You do have to release it. Then they say to me but can I withhold my commission? No, you can’t hold, withhold your commission because you’ve got rules surrounding trust monies and a direction to pay. You have to move it. Now. Real estate agents have what we call a lien on your commission. After it settles, after you get your order on the agent, do you have to release all of it? No, you have a lien on it but until it settles you’ve got to release it. So the reason both agents were told to release this money to the solicitor is because they needed it for settlement because there’s a shortfall with the bank. So if they sold it for a million dollars, they’ll mortgage on its 1.1. What chance do you think that my two agents have of getting their commission and their VPA after settlement? Zero, zero, nothing.
Then I moved to right, send me the agency agreement. So I see an anglicised name for someone of an Asian extraction with an address for them at the property that’s just been sold. The vendor says to the agent I’m just about to go back to China, I’m leaving, that’s it, I’m done. This just hasn’t worked out well for me. So there’s no opportunity to sue, there’s no money left, there’s no assets. The bank is going to be the first creditor if they let it settle, but there’s no money left. Both agents are essentially going to be stiffed for their commission and VPA.
I said to the agent you get the contract and I’d spoken. This is a manager, so not the salesperson that sold it. I said go get the contract. I said go have a look at the title, search what’s on it. And he goes yeah, it is, I know what you’re asking.
You know what I was asking how many mortgages are there? And I said. This is what’s fallen now because we’ve had a good market for so long. One of the old school things we used to always check was flick over to the title search. The title second tea lender behind the Commonwealth Bank means they’re in money trouble. That’s your first warning. Will Robinson Go when you see second and third tea lenders on the title If you have organized as soon as the contract comes in so you may book the first lot of ads. But I would not be spending your money on VPA that’s due on settlement if I see second tier lenders or two or three mortgages on a title because it tells me there’s nothing really money left. So go back and do some of the old school things that just sort of fell away, you know, and check your exposure.
Tom Panos 04:25
So, lisa, before you go on and I can’t remember who it was I got stopped physically by a client in the inner west on the last few days. Same situation. He said to me they’re forcing me to release the deposit. We’ve got a release, but I know I’m not going to get any money. It might be one of those two clients you’re talking about. I’m just having a mental blank who it was. And he said to me what do I do? I said I don’t know. I said I don’t know what to say to you. And you’re saying you’ve got to. If it hasn’t settled, you’ve got to release it.
Lisa Jemmeson 04:59
Yeah, it’s trust money, so different rules apply. Now I’m aware that there are agency agreements floating around that actually have a contractual provision in it saying that. If so, in the agency agreement let me be clear about what I’m saying there’s a contractual provision saying that prior to settlement, after unconditional exchange and prior to settlement, if I have to release funds I can leave the commission that I will ultimately be due in my trust account. That is going to fail Anyone who’s a vendor or the test that it’s going to fail. It’s an unfair contract provision.
Second of all, for all the licensees in charge, those sale deposits are not the vendor’s money until settlement Right. They’re trust money held in the account of the vendor and the purchaser and they are the earnest that binds the bargain Right Right. An agent has an entitlement to commission when it settles, because the agency agreement is the agent saying I will introduce to you a ready-willing and able purchaser who will buy your property on terms that are agreed, and a purchaser becomes ready-willing and able when they settle Right. So until it settles, you haven’t done what you contracted to do.
Tom Panos 06:21
Okay. So, lisa, if you’re in that situation and you’ve realized, they’ve got financial problems here. You know there’s a number of banks that are involved with money here. I’m not going to get my. I got a funny feeling. I’m going to struggle to get my commission. Is there anything you can do before you release the funds or not really? From around $10 per week: Real Estate Gym, your personal coach.