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PROPERTY NOT SOLD. PURCHASER’S BREACH OF CONTRACT. WHO PAYS AGENT’S COMMISSION?

There is a popular misconception on the agent’s commissions on Spanish property sales. It is understood that agents collect their commissions only on completion, and when the sale has been successfully completed.

But, what’s the real position of the agents by the Spanish laws?.

AN EXAMPLE:  When the buyer pull out the sale without “reasonable arguments”, the seller can cancel the contract, keeping the amounts already handed over by the buyer.

 This amount is considered, and must be used, as a “compensation” for the damages caused to the vendor for the breach of contract from the buyer.

 In this case, one of the expenses the vendor has to pay, is the agent’s commission. In Spain, the agents have rights to collect their fees in the moment in which buyer and seller agrees in written the terms of the sale, in the proper contract.

We can say, out of the general  that their function is to get the “legal agreement” between both parts, and they are not responsible of the “good end” of the transaction. They complete their commercial function in the moment in which they find a property for the buyer, and a buyer for the vendor.

 But, is quite common that the agents are not paid, or are not totally paid, till completion. This is a common practice, but the thing is that their rights are acquired in the same moment of the signing of the contracts.

 If there is a breach of the contract from the buyer or the vendor, then this must be out of the commercial responsibility of the agent, and, for this, out of his control. As result, his commission must be paid. The way in which they collect their services is with the amount obtained by one of the parts as compensation of damages from the other part’s breach.

Being buyer, or seller, try to keep this into account when contracting the services of an Spanish agent.

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