When is a real estate deal truly closed?
When is a real estate deal truly closed? The agent's right to commission
One of the most crucial aspects in the real estate world is understanding exactly when a deal is considered closed, and thus when the real estate agent is entitled to their commission. This is especially important for both sellers and buyers, as it can create confusion if not clarified early on.
The Role of the Real Estate Agent
A real estate agent's primary job is to bring the parties (buyer and seller) together to facilitate a sale. But when exactly can the agent consider their work finished and be entitled to a commission? Let’s break it down.
The Purchase Offer: A Binding Agreement
Many people are unaware that the seller's acceptance of a purchase offer signed by the buyer can be considered a preliminary agreement. This means that once the seller accepts the offer and informs the buyer, the deal can be considered closed, and the agent is already entitled to their commission. However, this is subject to suspensive and/or resolutive conditions that may be included in the offer and need to be met for the agreement to become binding.
What Are Suspensive and Resolutive Conditions?
- Suspensive conditions: These are clauses that suspend the contract’s effectiveness until a specific event occurs. For example, the purchase might be contingent upon the buyer obtaining a mortgage. If this condition isn’t met, the agreement won’t be valid.
- Resolutive conditions: These clauses can annul a contract that was initially effective. For instance, a resolutive condition could be the failure of the seller to obtain a required conformity certificate.
When Is the Agent Entitled to a Commission?
According to Article 1755 of the Italian Civil Code, a real estate agent is entitled to a commission when "the deal is concluded due to their intervention." This means that even if the final deed (rogito) has not yet been signed, the deal is already considered concluded with the acceptance of the purchase offer, barring any suspensive or resolutive conditions.
In other words, once the seller accepts the offer and informs the buyer, the agent has fulfilled their role and can request their commission. However, if there are conditions to be met (such as financing or permit approvals), the agent may have to wait for their fulfillment before considering the deal fully closed.
The Preliminary Contract and the Final Deed
Another key moment when the deal is considered closed is when the preliminary contract (or compromesso) is signed. This document formally commits both parties to signing the final deed (rogito), which is the definitive contract that transfers the ownership of the property. In many cases, the agent earns their commission at the time of the preliminary contract, but definitely by the time of the final deed.
Conclusion
For a real estate agent, a deal is considered closed, and they are entitled to their commission, when the parties (buyer and seller) reach a binding agreement. This can occur as early as the seller’s acceptance of the purchase offer, except in cases where suspensive or resolutive conditions are involved. The preliminary contract and final deed later solidify the closure of the deal.
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