Terminating an exclusive agency agreement

Can a property sale agreement include a clause giving a specific agent exclusivity over the sale? In which cases can such an agreement be terminated? In today's post we look at estate agency agreements, with a focus on exclusivity.

• The law does not prohibit exclusive agreements
• According to legal advisers
• Ways of terminating an exclusive agreement
• Is it possible to terminate an exclusive agency agreement?

The law does not prohibit exclusive agreements

When we decide to sell a property, we turn to an agent who reserves, in the agreement, exclusivity over the sale of the property we are offering. Can such a clause appear in the agreement in the first place?

The answer is – yes, it can. Polish law does not forbid such arrangements, and an estate agent may conclude agreements containing an exclusivity clause (umowa na wyłączność). However, this is an increasingly rare practice, because in a dynamic property market you have to keep fighting for the client. Where exclusivity is reserved, the person selling the property is not authorised to conclude sale agreements with other estate agents (only one person has that authority). But what happens if we, as the owners, sell the property ourselves? Will the agent be able to demand compensation? The answer should be sought in the wording of the agreement.

READ ALSO: SELLING PROPERTY IN POLAND AS A NON-RESIDENT

According to legal advisers

The subject is complex, because in property transactions the basis for recognising an agreement as valid is its written wording. According to legal advisers, if we sell our property ourselves (and the agent's actions did not contribute to the sale), the agent cannot demand compensation. If the property owner brought about the sale on their own, the agent has no right to demand a commission on that account.

The agreement may, however, contain clauses on reimbursement of costs incurred, although this is an increasingly rare practice. Clients are not willing to sign agreements that contain additional costs. The agent charges a commission, which should compensate for the risk and the costs of listing the property for sale, both under our particular agreement and under other assignments the agent carries out.

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Ways of terminating an exclusive agreement

Agreements signed on an exclusive basis most often specify a period that binds both parties, and also set a grace period. While agreements concluded for an indefinite period must state the conditions of termination, in the case of fixed-term agreements such a clause serves no particular purpose (after all, why conclude a fixed-term agreement if it can be terminated?).

If you decide to sign an agreement with an estate agent, we recommend paying attention to a clause allowing the agreement to be terminated in the event of a gross breach of its provisions. You can also include a clause allowing termination of the agreement for stated important reasons (these reasons / conditions should be specified in the agreement, otherwise the court will decide on them). Such a clause can make it significantly easier to resolve difficult situations, for example when the agent is not making much effort to sell our property.

The final form of terminating an exclusive agreement is the "by mutual consent" option, in which we set the terms of termination that both parties agree to.

READ ALSO: RENTING A FLAT THROUGH AN ESTATE AGENCY – COMMISSION

Is it possible to terminate an exclusive agency agreement?

The main thing to review is the content of the signed agreement and the termination conditions it contains. Of course, if we have concluded an agreement and, at a later stage of cooperation with the agent, we have doubts about some of the clauses it contains, we can ask the court to resolve the ambiguities.

According to a Supreme Court ruling, for an agent to become entitled to remuneration, they must have created an opportunity for the parties to conclude a property sale agreement. If the property was in fact sold as a result of the agent's actions, then the agent is entitled to remuneration. If the agent merely posted a listing on the internet, this does not necessarily contribute to the sale of the property. The agent is entitled to remuneration when, as a result of their actions, the seller was matched with a new buyer of the property.

We should also beware of clauses in the agreement providing for a lump-sum amount payable to compensate the agent for the costs of attempting to sell the property when the agreement has been terminated. Such a case was decided by the Regional Court in Warsaw (XVII AmC 1391/14). In a case concerning the clauses of an agreement, the court challenged the paragraph providing for a lump-sum fee for the agent resulting from termination of the exclusive agreement or failure to comply with its terms. The court indicated that an agent demanding "reimbursement of costs" should state their actual amount. The real costs incurred by the agent may be much lower than the lump sum included in the agreement.

Want to work with the best? Contact the estate agency REMAX Gold and put your trust in specialists who work on honest terms. We will prepare a property listing for you that clients will not be able to resist.

Sources:
Rz.pl
ghmw.pl