A Form 6 is the approved form under the Property Occupations Act 2014 (Qld) used to engage a real estate agent, property manager or auctioneer’s services. For the purpose of this article, we will be specifically looking at engaging an agent for the sale of a property.
A Form 6 will be prepared by the agent and presented to the Seller to accept and sign before the property is listed for sale. As a Seller, it is important to understand the nature of the agreement and any obligations that you have.
Part 1 – Client Details: You should ensure that your full legal name appears as per the name registered on the title of the property. The agent should order a title search to confirm that these details are correct. Discrepancies may arise where your legal name has changed since you purchased the property. Where the change is made by marriage or deed poll, you should provide a copy of the Marriage Certificate or Change of Name certificate issued by Births, Deaths and Marriages. Where the discrepancy is due to an error or more complex matter and an amendment may be required, you should contact our office for further advice.
Part 2 – Licensee Details: You should ensure that these details correctly reflect the agent you have chosen to engage.
Part 3 – Property Details: You should ensure that the correct address is shown here. The lot, plan and title reference should be checked against the title search. Ensuring these details are correct prior to signing will avoid any complications once you have secured a Buyer.
Part 4 – Appointment of Agent: In this section, you can select the type of appointment (sale, purchase, property manager, etc) and the term of appointment. A term can be up to 90 days before a reappointment is required. You must also nominate a list price, or where a list price isn’t shown (Contact Agent, For Sale, etc.), you must nominate a price range. Note bait advertising is an offence under the Australian Consumer Law. You may also list any conditions, limitations or restrictions on the performance of the service.
Part 5 – Termination: This sets out your obligations when terminating the agreement.
Part 6 – Types of Appointment: There are 3 types of appointment for you to choose from:
Open Listing: More than one agent can be engaged through an open listing agreement, but only the agent who is the effective cause of sale can claim commission for the sale.
Sole Agency: You can appoint another Real Estate agent during the period of sale, however if the property is sold while more than one agreement is in place, you may be liable for double commission and/or damages for breach of contract arising under the existing agent’s appointment.
Exclusive Agency: You cannot engage another Real Estate agent until that period has expired. The real estate agent has the right to claim the agreed commission for the sale of the property, whether or not they are the effective cause of the sale.
If you select a sole or exclusive agency, you must also select whether the appointment will continue as an open listing at the expiry. The agent has an obligation to explain these options to you at the time of signing, at which time all parties will sign Part 6.
If you are considering moving to a new real estate agent after a first appointment has expired, it is important to be aware that the first agent may still be entitled to be paid a commission, as well as the new agent. This can occur in situations where the first agent has introduced a buyer to your property in which case the first agent may be the ‘effective cause of the sale’. Despite the second agent not introducing the buyer, if that agent is appointed under an exclusive arrangement, it is entitled to commission regardless.
Where sellers are considering changing agents part way through their sales campaign, our advice is to obtain a list of potential buyers from the first agent. The Form 6 with the new agent should state that despite any term of their Form 6, if the property is sold to one of the buyers on the list from the first agent, commission will not be payable.
Part 7 and 8 – Commission and Expenses: These sections must clearly state:
- The fees, charges and any commission payable for the service,
- When the fees, charges and any commission for the service become payable,
- The expenses, including advertising and marketing expenses, the agent is authorised to incur in connection with the performance of each service or category of service, and
- The source and the estimated amount or value of any rebate, discount, commission or benefit that the agent may receive for any expenses that the agent may incur in connection with the performance of the service.
Part 9 – Signatures: The Form 6 must be accurately completed and signed and dated by all parties for the engagement to commence.
Part 10 – Reappointment: This section is completed and signed if the parties wish to reappoint the agent for a further term. If the parties wish to extend the exclusive or sole agency beyond 90 days, they can only do so in the last 14 days of the agreement.
There are a few more things to note:
- If any Buyer terminates the Contract under the Cooling Off Period, a penalty of 0.25% of the purchase price applies and is recovered from any deposit paid by the Buyer. You agree that the Termination Penalty will be divided equally between yourselves and the Agent.
- Commission becomes payable when:
- the Contract of Sale of the Property is completed; or
- the Client defaults under the Contract of Sale and that Contract is terminated by reason of or following that default; or
- the Contract of Sale is not completed and the whole or part of the deposit paid is liable to be forfeited; or
- the Contract of Sale is terminated by mutual agreement of the Client and the Buyer.
- You will be required to provide the agent more information about the property, such as whether compliant smoke alarms are installed, where there is a valid pool safety certificate for any pools on the property, whether you are aware of any easements or unregistered encumbrances and whether there has been a rental increase at the property in the last 12 months. You should ensure that this information is correct at the time of signing and immediately advise the agent of any changes.
The above information is provided as general advice to completing a Form 6. Our team of conveyancers are available to answer any questions or provide any further advice – get in contact with our team today.
