The Tale of Denied CommissionsRead Article

1 Introduction

• Background: The real estate industry, often perceived as a straightforward domain of buying and selling, is also a field ripe with legal intricacies.

2 Characters

• Plaintiff: A real estate agency appointed to sell properties for a development project, operating without a registered real estate agent’s license.
• Defendants: The developers of the project, who entered into a contractual agreement with the plaintiff but later reneged on the agreed commission rates.
• Legal Backbone: The case pivots around the Valuers, Appraisers, and Real Estate Agents Act 1981, emphasizing the necessity of a licensed real estate agent for commission entitlements.
  Footnote: In legal terms, the plaintiff is the party that brings a case against another in a court of law, alleging that they have been wronged and seeking redress. The defendant is the party against whom the lawsuit is brought, who must defend against the plaintiff’s charges.

3 Story: The Narrative

The sequence of events highlights the complexities of real estate commissions and the legal qualifications for agents:

• Appointment and Agreement: The plaintiff was appointed through a Letter of Appointment dated January 1, 2019, to sell properties in a specific development project, with a commission rate of 2.5% of the net sales price, excluding the 6% sales and service tax for each sold unit.
• License Controversy: Despite the absence of a licensed real estate agent within the plaintiff’s company, assurances were made by the defendants that the plaintiff’s services could be utilized. This understanding was based on a meeting prior to the appointment.
• Service Termination and Commission Reduction: The defendants terminated the plaintiff’s services in May 2019 and unilaterally reduced the commission rate to 1.5% without the plaintiff’s consent.
• Legal Action and Claim: The plaintiff initiated legal action, claiming an outstanding commission of RM194,555.25 for fourteen sold units, which the defendants refused to pay, citing the absence of a real estate agent’s license as the basis for their refusal.

4 Conclusion: Legal Findings and Industry Implications

The court’s analysis and verdict shed light on the legalities of real estate transactions and the enforcement of contracts:

• Verdict: The court ruled that the Letter of Appointment was void ab initio, as it contravened Section 22C of the Valuers, Appraisers, and Real Estate Agents Act 1981. The plaintiff’s claim for the unpaid commission was dismissed, emphasizing the contract’s illegality due to the lack of a registered real estate agent’s license.
• Legal Principles and Industry Practices: This case underscores the critical importance of complying with legal requirements for licensure in real estate transactions. The judgment serves as a cautionary tale, reinforcing that agreements contravening statutory provisions are unenforceable, highlighting the principle of “let the estate lie where it falls.”
• Takeaways for Real Estate Professionals: The dispute accentuates the need for clarity and adherence to legal standards within the industry. It exemplifies the risks associated with overlooking licensure requirements and serves as a reminder of the legal and financial implications of such oversights.