AN estate agent, in the exercise of his profession, provides mediation services, with the aim of carrying out a real estate transaction between a seller and a buyer. The relationship created is that of an agency and is based on an oral or written agreement. To claim commission for his mediation, the estate agent is required to have a contract between him and a seller. The sale must be the direct result of the mediation of the real estate agent. Even if the estate agent is not present at negotiations between the seller and the buyer the estate agent is entitled to commission. However, the mediation of a real estate agent is not necessary to achieve a real estate transaction.

When a question is raised whether a commission is payable to an estate agent, the issue to be examined is whether the buyer was found through the mediation of the estate agent and the sale of the property was attributable to him. The decisive factor is the mediation of the estate agent, through which the seller’s order was executed and the sale was achieved. In such a case, the estate agent is entitled to claim commission set by law at 3 per cent of the sale price, unless a higher commission has been agreed. The commission is payable upon the conclusion of the sale or rental agreement.

The rights and obligations of licensed estate agents are defined in the Law on Real Estate Agents. In case of failure to achieve the sale of a property for which the estate agent does not bear any responsibility, he is entitled to a reasonable fee, taking into account the time spent and his expenses.

A licensed estate agent claimed payment of his commission from the seller of a house sold to a buyer who was recommended by the estate agent. The seller claimed the house was sold for a lower price, without the sale being reached through the efforts or the mediation of the estate agent. The District Court of Larnaca accepted the estate agent’s version he was directly involved in the sale of the house, and the sale was the direct result of the seller’s instructions and his mediation of the estate agent.

The court held that an estate agent has no right to claim commission unless there is a contract to that effect. Essentially, the estate agent-seller relationship is an agency contract. The estate agent’s commission may be contractual or reasonable. The fulfilment of the order given by the seller is what gives the estate agent the right to remuneration. When this order is considered fulfilled so that the estate agent is entitled to commission, is always a matter of fact. However, what emerges from the decisions of the Supreme Court and English case law is that the real estate agent is entitled to commission when his mediation was the direct and main cause of the transaction. In relevant case law to which the Court referred, the final negotiations and agreement were conducted directly between the seller and the buyer without the presence of the estate agent and it was held that because the agreement was the direct result of the actions of the estate agent, he was entitled to be paid his commission.

In the particular case, the court held that the estate agent succeeded in proving that an agreement was entered into between him and the seller, according to which the agent undertook to sell the house to a third party. In this respect, the Court stated that the decisive and crucial element of the estate agent’s actions was the fact that he, through his employee, accompanied the buyer to the house which he inspected and after finding it to his satisfaction, he decided to buy it. His decision was made up, after he asked the estate agent to mediate with the seller to reduce the sale price he was asking.

George Coucounis is a lawyer practicing in Larnaca, [email protected]