Contracts, Agency, and Brokerage Agreements
Contract Fundamentals
Know the elements of a valid contract: offer, acceptance, consideration, capacity, and lawful object, plus the requirement that real estate transactions be evidenced in writing. Understand conditions precedent (e.g., mortgage approval, developer NOC), warranties, representations, and remedies for breach (specific performance, damages, rescission).
Agency and Brokerage Agreements
A Form A-style exclusive agency agreement gives one broker the right to commission; a non-exclusive or open listing allows several. Candidates must know when commission is earned (typically on a binding sale agreement, not merely an introduction), how commission is calculated, and what happens if the seller sells to a buyer introduced by the broker during the exclusivity period. Understand termination, notice periods, and the broker's authority limits - a broker cannot bind the seller to a price or term the seller did not authorise.
Traps
Expect questions where a buyer and seller try to bypass the broker after introduction - the broker may still be entitled to commission under the agreement. Another trap: assuming an oral agreement is sufficient; brokerage agreements should be written and registered where required. Also watch for authority confusion: a broker marketing at a price the seller never approved.
Worked Example
Exclusive agency for 90 days at 2%. On day 60 the seller signs directly with a buyer the broker introduced. The broker is entitled to commission because the buyer was introduced during the exclusive period and the sale resulted from that introduction.