Seller Refusing to Pay Estate-Agent Commission After a Sale? What Happens Next

A property has exchanged or completed, the buyer was introduced, and the estate agent has delivered the agreed service—but the seller refuses to pay the commission.

This is not merely an awkward conversation. If the commission is contractually due, it is an unpaid debt. However, an agent should not rush into threats or court proceedings without first confirming that the agreement and evidence support the claim.

1. Check exactly when the commission became payable

Start with the signed Terms of Business and establish:

• the agreed commission rate or fixed fee;

• whether the quoted fee included VAT;

• whether the instruction was sole agency, joint sole agency or sole selling rights;

• the event that triggered the commission;

• whether the agent introduced the eventual buyer;

• any continuing liability following termination; and

• whether another agent may also be claiming a fee.

Under section 18 of the Estate Agents Act 1979, an estate agent must provide written information explaining when the client becomes liable to pay remuneration and how the amount is calculated.

The current Property Ombudsman’s Residential Estate Agents Code of Practice also requires fees and additional costs to be clearly and unambiguously explained. Except for previously agreed additional costs, the Code states that commission normally becomes due on exchange of contracts.

The precise contract wording matters. An agent should not assume that commission is owed simply because the property was sold.

2. Assemble the evidence

Before demanding payment, create a complete evidence file containing:

• the Terms of Business;

• evidence that the seller received and accepted those terms;

• any later agreement changing the commission rate;

• the property particulars and marketing records;

• viewing confirmations;

• communications with the buyer and seller;

• the offer notification and memorandum of sale;

• evidence of sales progression;

• confirmation of exchange or completion;

• the completion statement, where available;

• the commission invoice; and

• any message in which the seller accepts or disputes the fee.

If another estate agent claims to have introduced the buyer, establish who made the effective introduction and whether the buyer’s interest remained continuous. The Property Ombudsman’s dual-fee guidance places considerable importance on evidence of a booked, confirmed and completed viewing.

3. Ask the seller to explain the refusal

Do not begin with an aggressive legal threat. Send a calm written request asking the seller to confirm:

• whether they dispute liability or only the amount;

• which contractual term they rely upon;

• whether they say another agent introduced the buyer;

• whether they believe the commission rate was changed; and

• what evidence supports their position.

This can identify a genuine misunderstanding before unnecessary costs are incurred.

If a lower commission was agreed by email or message after the original contract was signed, that evidence cannot simply be ignored. Any properly agreed variation may affect the amount recoverable.

4. Issue a clear final invoice and payment demand

The invoice and covering letter should identify:

• the property;

• the seller;

• the contractual commission rate;

• the sale price;

• the commission calculation;

• VAT;

• any payment already received;

• the total outstanding;

• the contractual payment date; and

• the deadline for payment.

Do not add invented “administration”, “recovery” or legal charges merely to increase pressure. Additional charges should only be claimed where the contract and applicable law permit them.

5. Allow the complaints process to operate

Where the seller alleges poor service, misrepresentation or an incorrect fee, the matter should also be handled through the agency’s formal complaints procedure.

The agent must continue to act professionally. The TPO Code states that pursuing commission must be proportionate, reasonable and non-intimidatory. It also indicates that court action will generally not be expected while the complainant has referred the dispute to the Ombudsman.

A genuine service complaint does not automatically cancel a contractual commission, but it must be investigated separately and fairly.

6. Send a compliant Letter of Claim

If the seller is an individual, the Pre-Action Protocol for Debt Claims will normally apply before proceedings are issued.

The Letter of Claim should include:

• the amount claimed;

• the contractual basis of the debt;

• the date and parties to the agreement;

• an updated statement of account;

• details of any interest or charges claimed;

• payment instructions;

• the prescribed Information Sheet;

• the Reply Form; and

• the Financial Statement form.

The letter should normally be sent by post, although it may also be emailed. The debtor generally has 30 days to respond before proceedings are started.

A routine seven-day demand sent by email alone is not a proper substitute for compliance with the Debt Claims Protocol.

7. Consider negotiation or mediation

The purpose of the pre-action process is not simply to threaten court proceedings. The parties are expected to exchange sufficient information, understand the dispute and consider settlement or alternative dispute resolution.

The Practice Direction on Pre-Action Conduct states that litigation should be a last resort.

Depending on the evidence, sensible options may include:

• payment in full;

• an agreed instalment arrangement;

• mediation;

• a commercially negotiated settlement; or

• agreement between two agents where there is a genuine dual-fee dispute.

Settlement should be considered commercially, but an agent with strong evidence is not required to abandon a valid commission simply because the seller refuses to pay.

8. Issue a County Court claim if necessary

If the seller does not pay, does not provide a sustainable defence and the pre-action requirements have been completed, the agent can consider issuing a County Court money claim. Claims can be started online or by post through the official GOV.UK money-claim service.

The claim may include:

• the unpaid commission;

• VAT where applicable;

• the court issue fee;

• contractually recoverable charges, where valid; and

• interest where legally available.

Section 69 of the County Courts Act 1984 gives the County Court discretion to award interest on a debt. It is wrong to assume that every claimant can automatically add any rate of interest they choose.

Can all legal costs be recovered?

No.

A straightforward claim worth no more than £10,000 will normally be allocated to the small-claims track. Under Civil Procedure Rule 27.14, recovery of legal costs is restricted.

The successful party may normally seek the court fees and certain limited expenses, but should not assume that every solicitor’s bill, administrative cost or hour of staff time will be recovered.

For larger claims, different cost rules may apply and professional legal advice becomes increasingly important.

The bottom line

A seller cannot avoid a properly earned commission merely by ignoring the invoice or claiming, without evidence, that another agent was involved.

Equally, an estate agent should not pursue commission without first checking the contract, the applicable fee-triggering event and the evidence connecting its work to the completed transaction.

The correct approach is simple:

1. verify the contractual entitlement;

2. preserve the evidence;

3. investigate any genuine dispute;

4. issue an accurate invoice;

5. follow the correct pre-action protocol;

6. consider settlement or mediation; and

7. commence a properly evidenced court claim if payment is still withheld.

At My Estate Luton, our terms, viewing records and sales-progression evidence are maintained carefully so that sellers, buyers and professional representatives have a clear and accurate record of the transaction.

For professional assistance with selling property in Luton, contact My Estate Luton Limited on 01582 380330 or visit www.my-estate.co.uk.

This article provides general information about estate-agency commission disputes in England. It is not legal advice and should not be relied upon as a substitute for advice on a specific contract or dispute.