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Closing & Commission

Applicable Legislation

Act Section What It Governs
PPA §41–42 Commission only earned by a registered practitioner with a valid FFC — and only if the mandate terms have been met
Code of Conduct (PPA) §6, §8 Trust accounts, handling of deposits and commission, financial integrity
PPA §55–58 Trust account requirements — must be held at a bank, audited, reconciled monthly
CPA §24–26 Consumer's right to fair value, good quality, and timely fulfilment
CPA §48 Price must be as agreed — no hidden or additional charges after the fact

✅ Compliance Checklist

  • Commission is earned strictly in terms of the signed mandate — the triggering event occurred (e.g. "introduction of a willing and willing buyer" or "registration of transfer")
  • Commission is disclosed in the offer to purchase — amount or basis clearly stated
  • The practitioner holds a valid FFC at the time commission is earned — not expired, not pending renewal
  • Deposit monies are paid into the trust account — not the agency's business account
  • Trust account has mandatory audit and monthly reconciliation on file
  • All fees, charges, and disbursements are disclosed in advance (CPA §48)
  • Closing documents are provided to both parties within a reasonable time
  • Where a client cancels within applicable cooling-off period (distance/electronic CPA), the practitioner has a process to refund any amounts received (less reasonable costs incurred)
  • Transaction records are retained for minimum 3 years (PPA §48), KYC records for 5 years (FICA)

❌ Prohibited Actions

  • ✗ Earning commission without a valid FFC — the transaction is voidable and commission cannot be recovered
  • ✗ Double-dipping commission from both buyer and seller without written informed consent from both
  • ✗ Withholding transfer documents or keys pending commission payment (fraud and CPA violation)
  • ✗ Charging commission on a failed transaction where the contract condition (e.g. bond approval) was not fulfilled — unless the mandate explicitly provides for this
  • ✗ Making false representations to the conveyancer about the agency's entitlement to commission
  • ✗ Using trust money for business operating expenses — criminal offence under PPA §58

⚠️ Warning Flags

  • "PPRA registration is pending" — if the practitioner does not yet have an FFC at the commission-earning event, the commission claim is likely unenforceable.
  • Deposit to the trust account: if a buyer pays a deposit directly to the seller's bank account (not via the agency trust account), the practitioner has lost control of the funds and could be held liable for misuse.
  • Commission disputes: if the mandate says "earned on introduction of a willing and willing buyer" and the seller withdraws before signature, you may not have earned commission — it depends on the specific wording.
  • Interest on trust deposits: belongs to the client (buyer or seller depending on agreement), not the agency.