Standard clauses for residential and rural agency agreements

Agents can choose to use a voluntary standard clause in their residential and rural agency agreements. These clauses were developed by REA and the Real Estate Institute of New Zealand (REINZ) in response to industry requests for clearer guidelines around commission and agency agreements.

Residential agency agreements

We recommend that all agents selling residential property use these clauses, and we advise vendors to only enter into residential agency agreements with real estate agents who use the recommended standard clauses in their agency agreements.

Benefits of the residential standard clauses

The clauses provide certainty about:

• when an agency ends
• when a commission needs to be paid.

Advantages include:

• consumers are protected from the risk of being asked to pay commissions to two agents
• reduced risk of commission-related disagreements between agencies
• reduced risk of complaints to REA or REINZ.

Features of the residential standard clauses

For sole agency agreements, the standard clauses set out that:

• the sole agency agreement will automatically expire after 90 days if no end date is specified
• an agent can only claim a commission if a sale and purchase agreement is signed during the term of the agency agreement; or if the agent introduces someone to the property during the term of the agency agreement, and that person then buys the property privately within 6 months of the contract ending.

For general agency agreements, the standard clauses set out that:

• agreements can be cancelled on 7 days’ written notice
• an agent can only claim a commission if a sale and purchase agreement is signed during the term of the general agency agreement and where:
  • the agent has been instrumental in bringing about the sale and purchase agreement - or
  • the sale and purchase agreement is signed with someone introduced by the agent.

  For both sole and general agency agreements, the sale and purchase agreement must eventually become unconditional. The agent can still claim a commission even if the sale and purchase agreement becomes unconditional after the agency agreement has ended.

  If a vendor sells privately to someone introduced to the property by an agent:

  If the vendor cancels a general or sole agency agreement and then sells privately to someone the agent has previously introduced to the property, the agent can claim a commission but only if the sale is made within 6 months of the contract ending.