CEA’s New Template Documents will Please Property Agents and Clients

Property agents and their clients may soon have an easier time: CEA has now put up template agreements on their website. This may well be a move toward standardisation. Here’s what you need to know:

Where are the new template documents?

You can find them here, on the Council For Estate Agencies (CEA) website.

Whys are these templates a big deal?

Singapore has always taken a flexible approach to dealings between property agents, landlords, and tenants. Unlike many other countries, we’ve never had a fixed, standardised contract for Tenancy Agreements, Purchase Agreements, and so forth. While there are broad similarities between the contracts offered by different agencies, they’ve always differed slightly.

CEA’s new templates, however, are the result of a conversation between the organisation and Singapore’s biggest agencies. It’s quite plausible that these templates will become the norm in the property industry.

However, note that it’s not mandatory to use these templates (at least not yet). For now, estate agencies can continue to use their own versions. We believe, however, that CEA wants these new templates to eventually be the standard.

What’s in these template documents?

They are rather lengthy, so we’ve highlighted some key points:

• Dispute resolution mechanics are spelled out
• Clear disclosure requirements
• Co-broking rules are specified
• Specific details regarding commissions
• Room for additional terms, so flexibility is preserved

1. Dispute resolution mechanics are spelled out

Under Applicable law and dispute resolution, the templates state that disputes between property agents and clients will head into mediation first. The request is made in writing, and the client has three weeks to respond; after that, it’s presumed the client does not want to head into mediation.

After a failed mediation, the issue then goes into arbitration (with the same requirement for a written request, three week notice, etc.)

This isn’t earth-shattering news in itself; but it’s good to see the process spelled out in the document. First time buyers, sellers, tenants, etc. have some sense of what will happen if things don’t work out.

2. Clear disclosure requirements

Under Disclosure requirements, property agents have to state the exact nature of any conflicts of interest. It also states that, if a conflict of interest arises after the execution of an agreement, the agent will only keep representing the client after getting the client’s written consent.

This can be useful, as there’s sometimes no conflict of interest at the time the property agent is appointed. To provide an anecdote: we know of a case where a property agent, who was representing the seller, later found out his fiance’s uncle was the buyer (the two had not met, at the time the agent was appointed).

In such a situation, it’s good to have some specific guidelines on how to proceed (especially in a way that doesn’t always necessitate the replacement of a good agent).

3. Co-broking rules are specified

Under Co-broking, the document now requires it to be specified whether or not the property agent can “co-operate of co-broke” with another agent, such as for the purposes of selling a property.

It also states how the commission will be shared, and that the client isn’t liable to pay any commission to the co-broking agent.

4. Specific details regarding commissions

The templates require the property agent to provide specifics on the agreed-upon commission (along with whether or not GST is included in the figure).

There are lines to protect the client here as well, such as by specifying the client isn’t liable to pay the commission, if the deal falls through with no fault of their own.

5. Room for additional terms, so flexibility is preserved

The templates do allow room for additional terms and conditions. This should allow us to retain some degree of flexibility, even if the templates become standardised documents.

One subtle advantage here is that you can spot non-standard terms. If you’re a first time property buyer or tenant, for example, you can clearly see that what’s written here is not part of a usual contract.

These templates will make life easier for buyers, sellers, and tenants

It’s will be easier, for example, for us to tell you what to look for in the paperwork when all the terms are standardised. And while cases of dodgy property agents are rare, these templates will make them easier to spot – it’s easier to recognise unusual terms added to a contract, for example.

For now it’s not mandatory for estate agencies to use these templates; but it will be a good thing to make it happen soon.

Do you like the new templates? Voice your thoughts in our comments section or on our Facebook community page.

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