Real Estate Brokerage Fee Payable if the Property Remains Unsold

Real estate brokerage fee payable if the property remains unsold whether one must pay real estate brokerage fees when a property remains unsold is a common legal issue arising in transactions transferring land use rights and land-attached assets. Under the 2023 Law on Real Estate Business, the payment of remuneration or commissions depends entirely on the agreed content within the brokerage contract. The following article provides detailed information on real estate brokerage fee payable if the property remains unsold.

What is a real estate broker?

The concept of real estate brokerage is clearly defined within Vietnam’s current legal framework. This is a conditional service business activity aimed at promoting the circulation of real estate commodities on the market.

Under Clause 2, Article 3 of the 2023 Law on Real Estate Business, real estate brokerage is a form of real estate service business. Concurrently, Clause 11, Article 3 of the 2023 Law on Real Estate Business explains that real estate brokerage acts as an intermediary for parties in buying, selling, transferring, leasing, subleasing, or lease-purchasing real estate. The broker performing this act does not directly participate in the contract as a buyer or seller but plays a coordinating role in the transaction.

The content of brokerage activities is specified in Article 62 of the 2023 Law on Real Estate Business, including:

• Searching for partners meeting the client’s conditions to participate in negotiations and sign contracts.
• Acting as an authorized representative to execute tasks related to buying, selling, transferring, leasing, or lease-purchasing procedures.
• Providing information and assisting parties in negotiating and signing real estate contracts.

What is a real estate brokerage commission?

To better understand the concept of brokerage remuneration, it is important to clarify the circumstances in which a real estate brokerage fee payable if the property remains unsold may arise within brokerage agreements.

A real estate brokerage commission (or brokerage fee) is a sum of money a broker receives during the process of executing a sale or lease transaction. This fee is calculated based on a percentage of the asset’s value or the lease value and constitutes a major part of the broker’s income.

Brokerage commissions are typically determined in the brokerage contract, which is an agreement between the broker and the buyer/seller. Usually, the seller (or owner) agrees to pay a commission to the broker if the transaction is successful. This amount is often a fixed percentage of the selling or leasing price, depending on the transaction type.

Commissions serve to incentivize brokers to work diligently to promote a successful transaction. For buyers, commissions are usually not factored into the purchase price; however, for sellers, they are deducted from the proceeds received from the transaction.

>>>See more: Dossier of Application for Real Estate Brokerage Practice Certificate

What is the commission rate for real estate brokers?

The issue of determining the commission rate becomes particularly relevant when discussing whether a real estate brokerage fee payable if the property remains unsold should be applied under certain contractual arrangements.

Under Article 63 of the 2023 Law on Real Estate Business, enterprises and individuals conducting real estate brokerage services are entitled to brokerage commissions when clients sign real estate sale, transfer, lease, sublease, or lease-purchase contracts.

The brokerage commission rate is agreed upon by the parties in the contract. Thus, the law does not prescribe a limit or ceiling on real estate brokerage commission rates; the amount depends entirely on the mutual agreement in the brokerage service contract.

Do I have to pay a commission if the house doesn’t sell?

A common concern among clients is whether a real estate brokerage fee payable if the property remains unsold must still be paid when the broker fails to complete a successful transaction.

You do not need to pay a commission fee if your house remains unsold. In real estate brokerage, the commission is a crucial part of the payment structure and typically only applies when the transaction is genuinely successful. This means you only pay the commission fee when you have successfully sold your asset and the transaction is finalized.

However, several important factors must be considered to fully understand commission payments when a transaction fails. Firstly, it depends on the initial brokerage contract you signed. Some contracts may include special clauses regarding the payment of brokerage fees even if the transaction is unsuccessful.

This could be a fixed fee based on the time the broker worked with you, or other service fees (remuneration). Therefore, carefully check the contract and thoroughly understand any fee requirements that may apply in this scenario.

Although there is no specific regulation on commission rates in the industry, you can still negotiate the fee with the broker. Success in negotiation depends on factors like the transaction type, the scope of services provided by the broker, and your working relationship with them. Some brokers may be willing to lower the commission rate if they represent both the buyer and the seller (acting as a dual agent). Naturally, this is negotiable depending on the specific situation and mutual agreement.

Cases where clients need to pay brokerage fees

In practice, contractual terms may specify situations in which a real estate brokerage fee payable if the property remains unsold is still required, depending on the agreed scope of brokerage services. Clients may need to consider paying the broker in a series of specific situations. We delve into each case below:

• Successful Transactions: If a client buys or sells a real estate asset and the transaction concludes successfully, a commission fee is typically payable to the broker. This fee is usually calculated as a percentage of the asset’s value and explicitly stated in the brokerage contract.
• Leasing: If a client leases a house or commercial real estate via brokerage services, they may have to pay a fee. This is often calculated based on a percentage of the total lease contract value.
• Asset Sourcing: If a client hires a broker to search for real estate to buy, the broker may request a sourcing fee or service fee to guarantee they will find suitable options.
• Special Projects: In some situations where clients request special brokerage services or participate in customized projects, alternative fee arrangements may be agreed upon. This usually applies to complex transactions or large projects with specific demands.

Note: Specific costs and conditions may vary depending on the agreement between the broker and the client. It is crucial to ensure all costs are clearly agreed upon and recorded in the contract to prevent future disputes.

In situations where the broker cannot sell the house, paying them depends on the clauses agreed upon in the initial brokerage contract. Therefore, you should carefully read the contract and discuss it with your broker to understand the commitments and responsibilities of both parties.

>>> See more: Price Negotiation Support Services in Real Estate Transactions

Legal risks arising from not clearly specifying brokerage fees

Failing to clearly define the conditions for a real estate brokerage fee payable if the property remains unsold may create legal uncertainty and increase the risk of disputes between the parties.

The lack of specific financial clauses and the failure to clearly stipulate whether brokerage fees must be paid for unsold properties in service contracts often lead to negative consequences for both the broker and the property owner. Errors in drafting these documents not only create conflicts of economic interest but also generate complex legal obstacles when conducting civil transactions.

Below is a detailed analysis of common legal risks, starting with those directly related to your payment obligations.

Disputes over payment obligations

Many brokerage-related disputes arise when parties disagree about whether a real estate brokerage fee payable if the property remains unsold should be enforced under the contract.

Disputes often arise when parties only agree verbally on whether brokerage fees are payable if a property remains unsold. The lack of a written contract makes determining payment schedules and commission terms ambiguous. Clients may face lawsuits or unconventional debt collection methods from independent brokers.

Difficulty in providing brokerage services

Unclear provisions regarding a real estate brokerage fee payable if the property remains unsold may also create challenges for brokers in performing their services effectively.

Without client logs or work confirmation records, brokers find it difficult to prove their role in a transaction. Conversely, clients also face difficulties in holding brokers accountable for misleading information that causes losses. The lack of a defined “successful transaction” leads to debate over whether signing a deposit agreement is sufficient to qualify for a fee.

Legal consequences for the parties

If contractual obligations regarding a real estate brokerage fee payable if the property remains unsold are not properly regulated, both brokers and clients may face potential legal consequences.

The biggest consequence is the stagnation of asset transfers due to unresolved brokerage fee disputes. Courts will rely on regulations in Chapter XV of the 2015 Civil Code regarding service contracts to resolve the issue, costing significant time and court fees. Furthermore, uncertified brokers providing services can lead to the brokerage contract being declared void.

The aforementioned risks are entirely preventable if clients utilize professional legal consulting services right from the contract drafting stage to ensure strict compliance with the Vietnamese legal framework.

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

Real estate brokerage fee consulting service at Long Phan Consulting Company

Long Phan Consulting Company provides advanced legal solutions to optimize our clients’ interests in real estate transactions. Our team of land and contract experts will perform the following tasks:

• Draft a real estate brokerage contract with strong clauses to protect the client.
• Review the legal status of the brokerage firm and the professional licenses of the individual brokers in accordance with the Law on Real Estate Business.
• We advise on establishing a commission payment mechanism based on actual transaction progress to minimize cash flow risk.
• We represent our clients in negotiating commission fees and penalties for breach of contract with the brokerage firm.
• Check the property’s legal documents to ensure the broker is providing accurate information to clients.

Some frequently asked questions about real estate brokerage fees

The following, Long Phan Consulting Company some frequently asked questions regarding whether real estate brokerage fees are payable if a property doesn’t sell. Please feel free to refer to the following information:

At what point is a transaction considered “successful” for the broker to receive commission?

The transaction is considered successful when the parties sign a notarized land use rights transfer contract as stipulated in Article 46 of the 2023 Law on Real Estate Business. However, the parties have the right to agree on an earlier payment time, such as immediately after signing the deposit contract, based on the principle of freedom of agreement as stipulated in Article 3 of the 2015 Civil Code.

Do individual brokers without a professional license have the right to demand commissions?

Individuals providing real estate brokerage services are required to possess a professional license and operate within a real estate exchange or brokerage firm as stipulated in Article 61 of the 2023 Law on Real Estate Business. If a broker operates independently in violation of regulations, the service contract may be declared invalid due to a violation of legal prohibitions, resulting in the non-occurrence of commission obligations.

Do you have to pay for advertising if the real estate agent doesn’t sell the house after 6 months?

Clients only have to pay advertising fees if the contract stipulates that brokerage fees are separate from commissions, as per Article 63 of the 2023 Law on Real Estate Business. Brokerage fees are payments for the effort and actual costs incurred (such as posting ads, distributing flyers), and this amount is independent of whether the transaction is successful or not.

If the buyer forfeits the deposit, will you have to share a portion of the deposit with the real estate agent?

This obligation only arises if the brokerage contract includes a clause regarding the percentage sharing of the deposit penalty received. If there is no specific agreement, based on Article 328 of the 2015 Civil Code on deposits, the entire deposit amount belongs to you, and the broker has no right to unilaterally withdraw it until the transaction connection obligation is completed to the final stage.

Are brokers allowed to receive a “premium” payment in addition to the agreed-upon commission?

Collecting fees beyond the commission or remuneration stated in the contract is a violation of the prohibitions in Article 8 of the 2023 Law on Real Estate Business. Brokers must honestly disclose the fees and must not defraud or deceive customers to profit from the price difference unless you have a written agreement allowing them to receive that surplus.

When does the brokerage obligation end?

The broker’s obligations typically end when the parties complete the signing of the sales contract and the broker receives the full fee as stipulated in Article 65 of the 2023 Law on Real Estate Business. However, if the contract includes additional provisions for assisting with the registration of land use rights (transfer of ownership), the broker’s responsibility only ends when the client receives the new land use rights certificate.

Conclusion

Determining whether real estate brokerage fees must be paid when a property remains unsold requires a profound understanding of contract law and market practices. Clients should not be complacent with verbal agreements to avoid prolonged legal troubles affecting asset liquidity. To receive professional support and maximize your financial protection, it is always advisable to establish tight, written agreements from the outset.

Please contact us Long Phan Consulting Company via Hotline 1900636389 To receive timely and effective support from our team of experts.