When you list a commercial property today, you have to make sure all the documentation is accurate and signed. Many a client has taken the opportunity to avoid commission when the chance or circumstances exist. There is nothing more frustrating than doing a good job in marketing a property then fighting for your commission after the deal is done.
Here are some rules to help you with the commission protection process when it comes to commercial sales or commercial leasing:
- Make sure that you are dealing with the correct owner of the property from the outside of listing negotiations. If there are any partnerships or company structures to take into account, then check out the correct people within each or all of the ownership structures. All of the correct owners of the property should be signing your appointment to act. You may need to get company searches to validate the true company ownership position.
- The appointment or listing forms should be legally accurate for your location and correct with regard to the subject property; any errors are likely to be located later by the client as an outlet for avoiding commission or fees.
- If you are expecting vendor or client paid marketing money, get it before you start any marketing program. Many clients have not paid monies when the property has not sold or the sale fell through for any reason.
- In the case of tangible dispute relative to property disposal, be very careful with the instructions you receive and the signing of the authority to act as agent in a sale. Make sure that you are fully satisfied that both parties to the transaction have appointed you to act as the agent. In such circumstances of divorce dispute, it is always wise to take any instructions from either or both parties in writing. You can then communicate individual instructions given to you by one party to the other party to avoid any conflict circumstances and later dispute.
- When listing the property, meet the client on site and walk through the property with the client to ensure that you have a complete understanding of the boundaries of the property, the improvements on the property, and any existing property matters or challenges. Any instructions, orders, or notices that come to your attention in the inspection process should be documented and dated. All discussions with the client should be similarly recorded. Evidence is critical in the commercial real estate profession to protect your position and integrity.
- Get copy of all property title and ownership papers that reflect the true situation today. This should be done before you take the listing to the clients to be signed.
- Your listing documentation has to reflect all variations of circumstances where you would expect to get paid your commission. The listing documentation should specifically say how you will be paid your commission and under what circumstances. It is good practice to have the client initial the relative clause in the appointment to act.
- If you are the controlling agent to the transaction, make sure that you get sufficient amount of deposit or payment of deposit into your trust account as part of the closure of a deal with a property purchaser or tenant as the case may be. This amount should pay your full amount of commission under the transaction if and when the transaction is completed. It is then simply a matter of extracting your commission from the monies held in trust account and you can then undertake the payment of the balance to the client.
- It is likely that solicitors will be involved in the property transaction on behalf of your clients. Make sure that your involvement is fully noted and acknowledged by the client solicitors.
Many agents will know just how difficult it is to get payment of commission after settlement. Solicitors and clients tend to forget about the agent and place low priority on discharging any commission or fees payments.
Regrettably, clients tend to place a low priority on the payment of commission once the settlement has been achieved. Any errors in documentation or listing appointment are likely to be designated as an opportunity to renegotiate fees or avoid payment.