Why your agent should not handle transaction money and ways to protect yourself when buying property - The Straits Times

As the property scene gets increasingly complex with new cooling measures and rising interest rates, one way home buyers and sellers, and even landlords and tenants, can better navigate the fast-changing landscape would be to engage a trusted agent who is registered with the Council for Estate Agencies (CEA).

But do consumers really know what their property agent can or cannot do for them?

Here are some guidelines on how you can better protect yourself, prevent disputes and make your home buying, selling or renting experience a pleasant one.

Your property agent is not your property manager

Your tenant is leaving and you need to return the rental deposit to him? Do it yourself – not through your property agent.

Got a leaking ceiling or need to complain about noisy neighbours? Speak to your landlord, not your property agent.

These are some common property management issues which a property agent is not supposed to handle as part of his or her work. A property agent’s duties cease when the property transaction has been completed.

For rental transactions involving HDB and private properties, the property agent has fulfilled his or her role once the tenancy agreement is signed and the property is handed over to the tenant.

“If an agent steps in to help resolve landlord-tenant issues or provides any other service, he is doing so out of goodwill,” says a CEA spokesperson.

Your property agent should not be handling your money

Real-life case study: A buyer wanted to pay the booking fee for a property in cash because he did not have a bank account. Agent A offered to take the cash and issue a cheque for the said booking fee on behalf of the buyer. He deposited the cash into his own bank account and issued a cheque to the developer. For his actions, Agent A was charged in court for breaching the Estate Agents (Estate Agency Work) Regulations 2010 for handling transaction monies and sentenced to a fine.

Remember, handling certain types of funds for the property transaction, whether for private properties or public housing properties, can be a serious offence, and property agents can be prosecuted in court. In addition, allowing your property agent to handle transaction funds may carry a risk that the monies are misappropriated by the agent. Keep these in mind to protect your interests and those of your agent to prevent disputes.

It is therefore important to be responsible for your own finances. Make payments directly to the other party in the transaction (the payee) through verifiable payment means, which include crossed cheques and bank transfers.

If payment must be made in cash, insist on the other party’s acknowledgment of the receipt in verifiable forms. This can be as simple as an SMS or e-mail stating the amount received, who it is from, the purpose of the payment, and the date that the transaction occurred.

The commission should be decided between you and your property agent

There is no fixed commission rate set by CEA nor any other government agency. You should discuss and agree upon the commission rate with your property agent before signing the estate agency agreement. This should be done before the property agent starts any estate agency work. CEA explains that such an agreement is a binding contract between you and your property agent’s agency for the estate agency work they are responsible for.

There are eight prescribed estate agency agreement forms for the sale, purchase and lease of residential property. You can choose to use either exclusive or non-exclusive agreements for each type of property transaction.

“The agreement protects the interests of both parties by bringing clarity to details in the property transaction, including stipulating the duties of property agencies and agents, and requiring the disclosure of any potential conflict of interest,” says a CEA spokesperson.

Always remember – pay commission only after your property agent has completed all his duties and directly to the agency, not to the property agent.

Don’t forget to sign an estate agency agreement before commencing work with a property agent.

Your property agent can only represent one party in a transaction

Property agents have been charged in court in the past, for representing both the landlord and tenants or potential tenants in a transaction.

In one case, Agent B charged the tenant a fee for securing the lease, and did not inform the tenant that he was already representing the owners.

In another case, Agent C negotiated a tenancy renewal representing both the landlord and the tenant, collecting commission fees from both parties.

Dual representation puts a property agent in a conflict of interest situation – the agent cannot act in the best interest of either party at the same time. The rules are clear: Dual representation is illegal. A property agent cannot be appointed by both seller/landlord and buyer/tenant and collect commission fees from both parties in the same transaction.

If one of the parties is not represented by a property agent and seeks your agent’s help to handle paperwork, your consent has to be obtained, and your agent can only help out of goodwill, without collecting any commission or fee from the other party.

For more information on working with property agents, visit the CEA website.

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