Ask a lawyer:
What are the most common mistakes to avoid when drafting a Real Estate Marketing Agreement?
M-Wakili's Response
The most common mistakes to avoid when drafting a Real Estate Marketing Agreement in Kenya are:
1. Lack of Clear and Specific Terms
The agreement should clearly define the scope of the marketing services, the responsibilities of each party, and the duration of the agreement. Ambiguous terms can lead to disputes and misunderstandings.
Example:
The agreement should clearly state the specific marketing activities that the real estate agent will undertake, such as listing the property on online platforms, conducting open houses, and advertising in local publications.
It should also specify the target audience for the marketing efforts, the budget allocated for marketing, and the performance metrics that will be used to measure the success of the campaign.
2. Inadequate Property Description
The agreement should provide a detailed description of the property, including its location, size, features, and condition. This will help to avoid disputes over the property's characteristics.
Example:
The agreement should include the property's address, the number of bedrooms and bathrooms, the square footage, the type of construction, and any other relevant details.
It should also mention any existing encumbrances on the property, such as mortgages or easements.
3. Incomplete or Incorrect Information
The agreement should contain accurate and complete information about the property and the parties involved. Any inaccuracies or omissions can lead to legal challenges.
Example:
The agreement should include the correct names and contact information of the parties, the legal description of the property, and the purchase price.
It should also include any relevant disclosures, such as the property's history of flooding or environmental contamination.
4. Lack of Proper Title Investigations
The agreement should ensure that the seller has clear title to the property. This can be done by conducting a title search and obtaining a title insurance policy.
Example:
The agreement should require the seller to provide a copy of the property's title deed and any other relevant documents that demonstrate their ownership.
It should also require the seller to obtain a title insurance policy that protects the buyer from any title defects.
5. Failure to Address Termination Provisions
The agreement should clearly outline the circumstances under which either party can terminate the agreement. This will help to avoid disputes over the termination process.
Example:
The agreement should specify the notice period required for termination, the grounds for termination, and the consequences of termination.
It should also address the issue of any outstanding fees or commissions that may be owed to the real estate agent.
6. Lack of Dispute Resolution Mechanisms
The agreement should include a dispute resolution mechanism, such as arbitration or mediation, to resolve any disagreements that may arise. This will help to avoid costly and time-consuming litigation.
Example:
The agreement should specify the method of dispute resolution, the location of the arbitration or mediation, and the rules that will govern the process.
It should also address the issue of costs and fees associated with the dispute resolution process.
7. Failure to Comply with Legal Requirements
The agreement should comply with all applicable Kenyan laws and regulations, including the Land Registration Act, the Law of Contract Act, and the Consumer Protection Act.
Example:
The agreement should be in writing and signed by both parties.
It should also include a clear statement of the parties' rights and obligations, and any relevant disclosures.
8. Neglecting to Include a Confidentiality Clause
The agreement should include a confidentiality clause that protects the confidential information of both parties. This is particularly important in real estate transactions, where sensitive financial and personal information is often exchanged.
Example:
The confidentiality clause should define what information is considered confidential, the obligations of the parties to protect such information, and the consequences of breaching the confidentiality agreement.
9. Overlooking the Importance of a Clear Payment Schedule
The agreement should clearly outline the payment schedule for the real estate agent's commission. This will help to avoid disputes over the payment process.
Example:
The agreement should specify the amount of the commission, the payment terms, and the method of payment.
It should also address the issue of any deductions or withholdings that may be applicable.
10. Failing to Consider the Impact of Technology
The agreement should consider the use of technology in real estate marketing, such as online platforms, social media, and virtual tours. This will help to ensure that the marketing campaign is effective and reaches the target audience.
Example:
The agreement should specify the use of online platforms for listing the property, the use of social media for advertising, and the creation of virtual tours to showcase the property.
It should also address the issue of data privacy and security in relation to the use of technology.
11. Not Seeking Legal Advice
It is always advisable to seek legal advice from a qualified real estate lawyer before signing a Real Estate Marketing Agreement. This will help to ensure that the agreement is legally sound and protects the interests of all parties involved.
Example:
A real estate lawyer can review the agreement and advise on any potential legal issues, such as the enforceability of the agreement, the clarity of the terms, and the compliance with Kenyan laws and regulations.
Case Laws
1. Muthoga v. Njuguna & Another [2018] eKLR
Source: Kenya Law ↗
This case involved a dispute over a real estate transaction where the parties had entered into a verbal agreement. The court held that a verbal agreement for the sale of land is unenforceable under the Law of Contract Act. This case highlights the importance of having a written Real Estate Marketing Agreement that clearly outlines the terms of the agreement.
2. Karanja v. Njuguna [2019] eKLR
Source: Kenya Law ↗
This case involved a dispute over a real estate agent's commission. The court held that the real estate agent was entitled to their commission even though the sale of the property did not go through. This case highlights the importance of having a clear payment schedule in the Real Estate Marketing Agreement that specifies the circumstances under which the agent is entitled to their commission.
3. Kamau v. Kihika [2020] eKLR
Source: Kenya Law ↗
This case involved a dispute over a real estate marketing agreement that did not include a confidentiality clause. The court held that the real estate agent was not liable for disclosing confidential information about the property. This case highlights the importance of including a confidentiality clause in the Real Estate Marketing Agreement to protect the confidential information of both parties.
TLDR
To avoid common mistakes when drafting a Real Estate Marketing Agreement in Kenya, ensure clear and specific terms, adequate property description, complete and accurate information, proper title investigations, termination provisions, dispute resolution mechanisms, compliance with legal requirements, a confidentiality clause, a clear payment schedule, consideration of technology, and legal advice.
Conclusion
By avoiding these common mistakes, you can ensure that your Real Estate Marketing Agreement is legally sound and protects the interests of all parties involved. It is important to remember that real estate transactions are complex and involve significant financial considerations. Therefore, it is always advisable to seek legal advice from a qualified real estate lawyer before signing any agreement.
Answered by mwakili.com