Can Brokerage Enterprises Collect Additional Fees Outside the Contract?

“Can brokerage enterprises collect additional fees outside the contract?” is an issue of concern for many customers and businesses during the brokerage service process, especially in areas such as real estate, commerce, or other intermediary services. According to current laws, all collections from intermediary activities must be based on a transparent written agreement between the broker and the brokered party. The following article by Long Phan Consulting will analyze in detail the legal basis for remuneration and fee collection limits.

Regulations regarding the obligations of commercial brokers

Based on Article 151 of the Commercial Law 2005, unless otherwise agreed, commercial brokers must fulfill the following core obligations:

1. Preserve goods samples and documents entrusted for brokerage and return them to the brokered party after completion.
2. Not disclose or provide information detrimental to the interests of the brokered party.
3. Be responsible for the legal status of the brokered parties, but not for their solvency.
4. Not participate in the performance of contracts between the brokered parties, unless authorized.

>>> See more: What is Real Estate Brokerage? Commission Rates for Brokerage Entities

Regulations regarding the commission and expenses incurred by the brokerage firm.

According to Article 153 of the Commercial Law 2005, the right to brokerage remuneration arises from the time the brokered parties have signed a contract with each other, unless otherwise agreed. This means the broker’s work result is recognized when the transaction is legally established. If there is no specific agreement, the remuneration is determined by the market price at the time and place of service provision (Article 86 Commercial Law 2005).

Besides remuneration, the brokered party must pay reasonable incurred costs related to the brokerage according to Article 154 of the Commercial Law 2005. Note that this obligation exists even if the brokerage does not bring final results (unless otherwise agreed). These costs may include travel, communication, marketing, or administrative expenses serving the commercial connection directly.

Is it right or wrong for brokerage firms to charge additional fees beyond the contract?

From the above legal bases, it can be affirmed that brokerage enterprises cannot arbitrarily collect additional fees outside the contract, unless that collection has been clearly agreed upon, is legal, and has a written basis. Collecting additional fees is only considered lawful when fully meeting the following conditions:

1. Based on Agreement: According to the principle of freedom of agreement in the Commercial Law 2005, all remuneration or costs must be agreed upon in advance or established via contract appendices/supplementary agreements. Without this, the broker has no right to unilaterally set new fees.
2. Distinction between “Remuneration” and “Reasonable Costs”: Remuneration is for results (Article 153), while reasonable costs are for actual necessary expenses (Article 154). Brokers cannot “merge” or “rename” remuneration into costs to collect more money outside the agreed scope.
3. Transparency and Proof: Reasonable incurred costs must have proof (invoices, documents) and be commensurate with the brokerage activity. Vague fees without proof of reasonableness may be considered a violation of the obligation of honesty and good faith.

Conversely, brokerage enterprises are considered to collect fees illegally in cases of:

• Collecting additional remuneration/fees not prescribed in the contract.
• Collecting fees when conditions for remuneration rights have not arisen.
• Imposing unreasonable costs without documents.

In these cases, the brokered party has the right to refuse payment, request a refund, and claim compensation for damages.

>>> See more: Role of Real Estate Brokers in Land Transactions

Brokerage contract consulting services at Long Phan Consulting

Long Phan Consulting provides comprehensive consulting services to protect the maximum interests of Clients participating in commercial brokerage relationships. We understand that a strict contract is the strongest legal shield against non-transparent service fees. We structure our support into the following key areas:

1. Fee Structure and Cost Roadmap Consulting

• Support 1: Consult on building a fee collection roadmap and a list of costs consistent with legal regulations for brokerage businesses.
• Support 2: Advise Clients on distinguishing between legitimate reasonable costs and arbitrary additional fees to prevent overcharging.
• Support 3: Assist in defining clear criteria for “reasonable incurred costs” in contracts to avoid ambiguity.

2. Contract Drafting and Risk Review

• Support 1: Draft specific clauses regarding remuneration, payment methods, and conditions for the right to brokerage fees to arise.
• Support 2: Thoroughly review brokerage contracts before signing to eliminate vague terms that could lead to unintended fees for Clients.
• Support 3: Construct supplementary agreements or appendices for any additional fees that arise during the service process, ensuring legal compliance.

3. Dispute Resolution and Legal Representation

• Support 1: Represent Clients in working with brokers upon detecting regulations violations regarding fee collection or illegal price difference collection.
• Support 2: Provide legal support in requesting refunds for amounts paid incorrectly according to the contract agreement.
• Support 3: Advise on steps to take legal action if the broker refuses to resolve fee disputes amicably.

Frequently Asked Questions

Below are some frequently asked questions regarding brokerage fees; please refer to them:

Is the broker entitled to a fee if the contract between the parties being brokered cannot be fulfilled after it has been signed?

Yes. According to the law, the broker’s right to receive commission arises at the moment the brokered parties sign a contract (unless otherwise agreed). Whether that contract is later completed or canceled does not affect the broker’s right to receive commission, as they have fulfilled their obligation to connect the transaction.

(Legal basis: Clause 1, Article 153 of the 2005 Commercial Law.)

If the fee is not agreed upon in advance in the contract, how is the brokerage fee calculated?

In the absence of a specific agreement on fees, brokerage fees will be determined based on the market price of that type of service at the time and place of service provision. If the market price cannot be determined, the fee will be calculated based on the average price of similar services in the market.

(Legal basis: Article 86 and Clause 2 of Article 153 of the 2005 Commercial Law.)

Is the broker liable if the buyer/seller fails to make payments as per the contract?

No. The broker is only responsible for the legal standing of the parties (e.g., being of legal age, having the authority to sign, and not being restricted in their capacity to act). The broker is not responsible for guaranteeingguaranteeRegarding the financial capacity or ability to pay off the parties being brokered, unless they have a specific guarantee commitment in the contract.

(Legal basis: Clause 3, Article 151 of the 2005 Commercial Law.)

What are the reasonable incidental expenses that the party being brokered must pay?

Reasonable expenses are actual and necessary expenses incurred directly by the intermediary in the brokerage activity, including: travel expenses, communication expenses, document printing expenses, and related administrative fees. These expenses must be supported by valid invoices and receipts, and the brokered party must pay them even if the transaction is unsuccessful, unless otherwise agreed.

(Legal basis: Article 154 of the 2005 Commercial Law.)

Does the real estate agent have the right to represent the client in signing the purchase and sale contract?

In principle, the broker is not permitted to participate in the execution of the contract between the brokered parties. However, if the broker receives legally valid written authorization from the brokered party, they may act on behalf of the client in performing legal acts, including signing contracts. In this case, they are acting as an authorized representative rather than simply as a broker.

(Legal basis: Clause 4, Article 151 of the 2005 Commercial Law.)

Conclusion

Collecting fees outside the agreement not only violates the principle of voluntariness in commerce but also exposes brokerage enterprises to serious legal risks. Clients need to carefully review contract terms before signing.

Please contact Long Phan Consulting via hotline 1900636389 for in-depth and timely support.