- Legal battles between sellers and agents over commissions have become more common
- Gold Coast case saw commercial estate agent awarded $100,000 plus interest after four-year battle
- Cases expected to occur more frequently given longer sales times for some properties
Amid the turmoil in the housing market, legal battles between sellers and agents over commissions have become more common, with one lawyer warning that such cases will continue to rise.
Ben Twomey, principal of firm Twomey Dispute Legal, noted that commission disputes usually arise between a seller and an agent when there is an open listing and a lengthy process, with his company Gold Coast regularly dealing with such disputes.
“This problem seems to arise quite often when there is an open listing and the agent claims he was the actual cause of the sale,” Mr Twomey said.
“However, being the actual cause of the sale is not as simple as the agent introducing the buyer to the property. It’s not sufficient.
“The agent must show that he was instrumental in getting the deal done.”
Mr Twomey noted a 2021 case in his form, conducted for Real Commercial QLD estate agent Joseph Codianni v Preetpal ‘Mick’ Singh, as an example of an acrimonious legal dispute that went to trial following a sale complicated.
The lawsuit begins in 2019 after Mr Singh refused to pay Mr Codianni $100,000 in commission for his involvement in the sale of Mr Singh’s commercial property at 35 Dominion Road, Ashmore.
This asset was sold to Bill Adler, director of Imagine Education, for $3.2 million in September 2018.
Prior to the sale, two contracts to purchase the property for $3.2 million were signed between Stonehaven, Mr. Alder’s company, and Mr. Singh, where Mr. Codianni was the exclusive selling agent.
Both contracts, however, were terminated as Stonehaven was unable to secure funding.
Mr Codianni claimed it was his idea to strike a deal for Imagine Education and Stonehaven to lease the property for five years, with Stonehaven giving notice until 31 May 219 that they could buy the property on the same terms than any of the previous ones. contracts.
In September 2018, Stonehaven exercised this option, for $3.2 million.
Mr Singh refused to pay the commission to Mr Codianni, arguing that he was not the actual cause of the sale as the transaction was due to the call option deed drafted by his lawyers and Stonehaven.
Additionally, he alleged that CBRE’s senior manager, Tania Moore, introduced him to Mr. Alder when he was looking to rent the property in question.
Following the April hearing, Magistrate Grace Kahlert ruled in favor of Mr. Codianni,
“Mr. Codianni’s efforts to induce Mr. Adler……to offer to purchase the property from the defendant for $3,200,000 materialized in such a way that he was in a real sense an important cause and substantial portion of the final sale in September 2018,” the magistrate said. ruled in the judgment of July 2021.
Mr. Codianni received $100,000 plus interest, or $113,821.
The case had been conducted over the four years as “purely our principle”, Mr Codiannai said, on behalf of other officers.
“This deal cost me $135,000, which exceeded the commission I was owed on the sale,” he said.
“However, I wanted to send a message to the minority of wealthy sellers who do not pay agents for a job well done, knowing that most agents or agencies are reluctant to enter a long and costly legal battle.
Joseph Codianni, Real Commercial QLD
“I was able to present to the court a significant amount of documented evidence that clearly showed that I was entitled to the commission I was seeking.
“Realtors run the only businesses that operate effectively for free until a property sells and settles, and after putting in so much effort, expertise and time I was not ready to go away”.
“I got an above market price for Mr. Singh’s property of $500,000 above appraisal plus about $400,000 more in rental income until settlement is reached in 2018. “
Mr Codianni noted that the deal was a “gamble” given he was unsure whether Mr Singh had the assets to pay it.
“He bet I would give up and leave but he was wrong.”
More and more frequent cases
As properties take longer to sell, leading to a range of complications, Mr Twomey said he expects such cases to become more common.
He advises agents to properly document the sales process.
“When you claim you were the actual cause of the sale, you must give a timeline of everything you did that contributed to making the sale,” he said.
“You have to keep a timeline of everything that happened. Take detailed notes and document them as much as possible.
“Generally, the law recognizes that our memories aren’t perfect and if you have a highly contested case, you want to have as much in writing as possible.”
Ben Twomey, Twomey Legal Litigation
In the case of Mr. Codianni, there was plenty of documentation to support that he owed a commission.
“What the court ruled was that without Joseph there was no deal,” he said.
“Joseph did a very good job. When contracts fell through in the first few months, he put other options on the table, such as lease and option deed, which led to the sale.
“It was a resounding victory, and the judgment reflects that.”
Disclaimer: This article contains general information and should at no time be considered legal advice to the reader. Readers should always check their situation with their legal advisors before taking any other action.