If you are buying or selling an apartment, you will most likely come across real estate agencies. But how much do you really know about their obligations and what the law requires?
Here is a guide through the most important rules – and a few traps to watch out for.
- Registration of Agencies and Agents in the Register of Intermediaries
Real estate agencies may operate only if they are registered in the Register of Real Estate Intermediaries, maintained by the Ministry of Trade. The same applies to individual agents, who must also pass a professional exam. It is prohibited for any person who does not meet these requirements to perform brokerage activities.
Even when the agency is properly registered, it sometimes happens that the representative showing you the apartment is not. That’s why you should always check in the Register of Intermediaries whether the agent is truly registered. In case of doubt, you may contact the Ministry for an extract from the register or, if necessary, the Market Inspection.
- Brokerage Agreement, General Terms and the “Viewing Confirmation”
Clients usually come into contact with an agency as soon as they respond to an advertisement, while sellers do so when they agree that the agency advertises their property. However, cooperation with an agency cannot be based on a verbal agreement only – a written brokerage contract is mandatory. Apart from rights and obligations, this contract must include: the registration number of the intermediary, the subject of brokerage, commission amount and payment method, duration of the contract, and any additional costs.
The agency must also have general terms and conditions of business, which form an integral part of the contract (if you don’t receive them, ask for them) and must be visibly displayed in the business premises.
A common practice is the so-called confirmation of property viewing – a document by which the buyer confirms that a particular agent showed them the property.
Agencies sometimes insist that every potential buyer signs this confirmation, with the idea of later using it as a basis for charging a commission from the buyer as well, even if the buyer did not initially engage that agency (“double commission”, see point 6 below).
It may seem like a formality, but court practice has shown that such confirmation can even have the legal effect of a brokerage agreement if it contains all necessary elements.
Tip: Before engaging an agency, always request and read both the contract and the general terms of business, as well as the “viewing confirmation” if the agency insists on signing it.
- Obligations of the Broker Toward the Client
The agency has a number of obligations, while most important ones toward the client are to:
- advertise the property, enable its viewing, find and bring potential buyers, and mediate in negotiations;
- provide a realistic opinion on the price, verify documents and warn of risks (e.g. encumbrances, pre-emption rights, restrictions on transfer), and inform the client about all relevant circumstances;
- protect the client’s personal data and, upon the client’s request, keep information about the property and the mediated transaction as a business secret.
- The Agency Is Not a Lawyer and Cannot Provide Full Legal Security
However, when it comes to legal risks, you should not expect too much.
An agent is not a lawyer, and usually not even legally trained. Even when the agency has its own lawyer, that lawyer primarily represents the agency’s interests. Their main goal is to collect the commission – as quickly as possible.
Therefore, in practice, due to agents’ haste, lack of legal expertise, and poorly drafted contracts, serious errors and issues can occur that may later cost you a lot.
That’s why it’s highly advisable to always have your own legal advisor or attorney, because real estate transactions are serious matters, often involving very complex legal issues and potential consequences. Even if the agency or its lawyer prepares the contract, always have the contract and related documents reviewed by your own advisor – because neither the agency nor the notary who certifies the contract will fully protect your interests.
You can read more about certain common misconceptions and mistakes in real estate purchases in our article: Ten Misconceptions That Lead Buyers of New-Build Apartments to Make Costly Mistakes – From a Real Estate Lawyer’s Perspective.
- When Does the Right to Commission Arise?
The broker earns the right to a commission at the moment the contract they mediated is concluded, unless otherwise agreed (e.g. at the signing of a preliminary agreement).
The broker cannot request partial payment of the commission in advance, and additional service costs can be charged only if explicitly agreed.
Pay attention: If the client terminates the brokerage contract but still concludes the deal within a month as a result of the broker’s efforts, the agency is still entitled to a commission.
- Double Commission – From Both Buyer and Seller
Can the agent charge a commission from both the buyer and the seller? The answer is yes, but the following applies: The Law on Obligations states that the broker may claim only half of the commission from each party, unless otherwise agreed.
However, since there is no statutory limit on the commission amount, in practice a broker may propose a commission that represents double the usual rate. When this amount is divided between the buyer and the seller, it effectively means that the broker collects the full commission from both sides for the same mediation.
Check the general terms of business – they must specify the amount of the brokerage fee or the method for determining it, so the commission amount can be established accordingly and divided between both parties. Also review the contract itself to ensure it aligns with the general terms.
- Contract Clauses – What Cannot and What Must Be explicitly stated
When signing a brokerage contract, pay attention to the following:
- Any obligation to enter into negotiations is null and void – no one can force you to negotiate or conclude a contract with a person the agency found.
- Anonymous client – the broker may keep the client’s identity confidential, but this should be expressly agreed upon.
- Exclusive brokerage – if you sign this clause, you cannot engage another agency for the same property; otherwise, you must pay damages (the agreed commission). The broker must specifically warn the client about the meaning and legal consequences of such a clause.
- Other Obligations and Prohibitions
The agency must maintain the prescribed records of brokerage activities and, when advertising, must always state its business name, registration number from the Register of Intermediaries, and accurate information (price, location, area, structure).
An agency that you have not engaged may not take over your property advertisement: it is prohibited to advertise properties for which the agency has no signed brokerage or sub-brokerage contract.
An agency may transfer its rights and obligations from the brokerage contract to another broker through a sub-brokerage agreement, but only if the client has expressly agreed to this in the original brokerage contract. The broker must provide the client with a copy of the sub-brokerage agreement within three days of its conclusion.
- When Does the Brokerage Agreement Expire?
The contract expires upon: the end of the agreed term (if not otherwise agreed, the term is one year); the conclusion of the deal for which the broker mediated; or termination (in writing or electronically). Termination does not need to be justified and becomes effective once delivered to the broker.
Conclusion
Real estate agencies have clearly defined legal obligations, but also considerable room to structure their contracts in ways that may be either favorable or unfavorable to the client. Therefore – always read the general terms and brokerage agreement carefully and check whether the agent is registered. Always have your own legal advisor or attorney review the property sale and purchase agreement and all related documentation.
To learn more about what an agency’s job is not – and about the common mistakes and misconceptions we encounter in practice when clients lack proper legal support – read our blog: Ten Misconceptions That Lead Buyers of New-Build Apartments to Make Costly Mistakes – From a Real Estate Lawyer’s Perspective.
This text is written for informational purposes only and does not constitute legal advice. We are at your disposal for any additional information.
