Homefront: 'How enforceable is a non-exclusive Form A when selling a property in Dubai?'
The overseas seller wants to know if he has to pay the Form A commission if he sells the property himself
How enforceable is a non-exclusive Form A? I am overseas and have listed my property for sale with a well-known agent, but they do not seem to be doing anything other than having it listed on various portals with similarly priced properties. It seems agents only work with buyer clients of that agency and not others. I am also trying to sell it myself with referrals to people I know. My first question is, if I am able to sell the property privately (or via a different agent) can the first agent come after me for a commission because he has the property under form A? What if he becomes belligerent and complains to the police, claiming he was responsible for the sale? I also receive unsolicited emails from agents who claim to have ready buyers. I have often emailed them back with the property listing I have on propertyfinder.ae, but they either never respond, nor contact my agent (to the best of my knowledge). In one case, an agent sent me a Form A for his representation before he would ‘show’ his clients. What are your thoughts on this? Lastly, is the commission amount on the Form A the only commission payable or does the buyer also pay the agent (or buyers’ agent)? I received a conditional offer but it was for X amount, with a provision that I have to pay the ‘full’ commission. Also, the commission amount was almost double the 1 per cent that is listed on Form A. AK, Dubai
Last year, the Real Estate Regulatory Agency, the regulatory arm of the Dubai Land Department issued a statement to Dubai property owners to sign the Form A with their broker/agent otherwise the property cannot be advertised. Form A is the agreement between seller and agent and it outlines the terms of the engagement between the parties, such as the listed price, the length or duration of the appointment and fees (if any).
Although Form A has been required for several years, it is now strictly enforced due to Rera regulations requiring that all property advertisements be approved and given a permit number. Part of the requirement to obtain a permit is for the seller to sign the Form A. The required forms/documents needed to list your property is the Form A, your passport copy and a copy of the title deed. With these three documents, any broker can apply for the advertising permit and commence marketing of your property.
If you have a non-exclusive agreement with your current agency, this gives you the right to also market your property with other companies as well. Dubai real estate regulations do not limit the number of brokers that can list a single property but the only word of caution is to avoid giving it to many as the whole process can be very frustrating and you may experience unethical behaviour from some brokers due to the intense competition. Some sellers think that having more brokers leads to more exposure, a quicker sale and a higher price but this is not usually the case. What tends to happen is that the same buyer will return to the property with various brokers; the buyer will then only deal with the broker advertising the lowest price.
Just as you can list with other agencies, you can also sell a property yourself without any restrictions. Your present agent cannot come after you for a fee unless he can prove he showed the property to the eventual buyer or was instrumental in selling the property. Just having a Form A in place is not enough unless it was an exclusive appointment.
While some buyer agents will work with others to close sales, this is rare as they do not like to share the buyer's fee.
In your case, however, as you have signed the form confirming a fee will be paid by you to your agent - this ensures that other agents will collaborate with your present agent. Any, or all, of the other listing agents will send you the Form A to sign as they cannot market your property without this. Remember, it is your choice as to how many agents you allow to market your property.
Form A is the marketing contract between seller and agent and any reference to fees here is between these two parties. In Dubai, the normal practice is for the buyer to pay the commission but it is becoming more and more common that sellers pay too. In fact, this is how it should be because it is the seller that requires the services of the agent to sell the property and for this there ought to be a fee. Rera states that the sales commission can be any amount that is agreed between the parties. The norm is 2 per cent from the buyer and 2 per cent from the seller. It is not illegal for an agent to charge both buyer and seller, as long as there is transparency and full disclosure with the consent of all the parties.
For ease and success of marketing, I suggest all sellers pay their chosen agent when the property is sold, this way the seller agent will have a greater chance of selling success given buyer agents will then contact them in order to close the deal.
Mario Volpi is the sales and leasing manager at Engel & Volkers. He has worked in the property sector for 34 years in London and Dubai.
The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to email@example.com
Updated: August 1, 2018 01:52 PM