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Abu Dhabi, UAESaturday 17 November 2018

Homefront: 'Should I pay a fee directly to an agent rather than the company?'

The Dubai resident says the property broker has now left her employer and is requesting direct payment

Fortunes have been made by some investors - particularly those that bought in 2006 and sold in 2008, or bought in 2011 and sold in 2014. Antonie Robertson / The National
Fortunes have been made by some investors - particularly those that bought in 2006 and sold in 2008, or bought in 2011 and sold in 2014. Antonie Robertson / The National

I purchased an off-plan property in Dubai in late 2016, which was completed and handed over at the end of last year. During the negotiations between myself, the agency and the developer, the agency agreed to remove its 1.5 per cent agency fee from the purchase price. This was because, at the time, the bank I was looking to take a mortgage from were offering to pay the 1.5 per cent fee as an incentive to sign up with them. However, I would only be able to take the mortgage once the property was completed in late 2017, so the agency were willing to wait until that time to receive the fee. This was never formally written down or agreed in any form of signed documentation or contract; the discussions were either verbal or via WhatsApp. Due to a change in circumstances, I ended up purchasing the property outright without a mortgage and therefore never received the 1.5 per cent agency fee contribution from the bank. The specific agent I was dealing with throughout the purchase process left the agency in early 2017 before the property was completed. She is now contacting me as an individual (not as a representative of the agency) requesting that I pay her the fee directly. She has taken legal advice and her solicitors have written to me requesting payment. The agency itself has never contacted me for the payment. My understanding is that my obligation for payment would be to the agency and not to the specific agent as an individual. Any general guidance you could provide here regarding my obligations for payment would be greatly appreciated. MM, Dubai

There are many factors to your dilemma. Firstly, if one buys an off-plan property, the industry standard is for the developer to pay any commission owed to the agency, it is not normally the buyer's responsibility. A buyer normally pays the agency commission only if the property is either, ready - ie on the secondary market - or if it is off plan only when it is a resale of an off-plan property.

Mortgage finance for an under-construction property is given by banks only up to maximum of 50 per cent loan to value. Given you did not have anything in writing in the form of the sale contract, or any other written agreement confirming you are liable to pay the 1.5 per cent agency fee, I suggest it would be difficult to confirm there was an agreement. I understand that a WhatsApp communication may not necessarily be admissible although this may prove otherwise (only a judge can decide).

I can confirm that the Real Estate Regulatory Agency has for sometime now, been phasing out freelancers from the real estate industry and recommends the public only deal with reputable Rera-qualified agents. These agents can only be Rera-qualified if attached to companies; they cannot operate unilaterally without being employed by a licensed real estate company.

Your agent has now got in touch, requesting the commission. I suspect that the solicitor's letter is just a way of applying pressure on you to pay the fee. The fact is that if she is not with an agency, you should not write a cheque personally to her. Despite the long period that has now passed, I’m sure you will not disapprove of paying a fee, just not to an individual. If the agent can offer a legal invoice via a company, then by all means go ahead and pay it.

You can of course do nothing at this stage and wait to see what happens. If the agent insists on the fee being paid, I suggest you tell her that you will only pay the original agency, once they supply an invoice for the same.

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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 mario.volpi@engelvoelkers.com