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What should be included in a Real Estate Finders Fee Agreement?

Introduction

This response will address the question of what should be included in a Real Estate Finders Fee Agreement in Kenya. It will delve into the legal framework surrounding such agreements, highlighting key provisions and considerations.

Table of Contents

1. Legal Framework 1.1. The Law of Contract 1.2. The Estate Agency Act

2. Essential Elements of a Real Estate Finders Fee Agreement 2.1. Parties to the Agreement 2.2. Subject Matter of the Agreement 2.3. Finder's Fee 2.4. Payment Terms 2.5. Duties and Responsibilities 2.6. Termination Clause 2.7. Dispute Resolution

3. Conclusion

Legal Framework

1.1. The Law of Contract

The legal framework governing Real Estate Finders Fee Agreements in Kenya is primarily based on the Law of Contract. This law, as enshrined in the Contract Act, Cap 23 of the Laws of Kenya, outlines the essential elements of a valid contract, including offer, acceptance, consideration, and intention to create legal relations.

1.2. The Estate Agency Act

The Estate Agency Act, Cap 533 of the Laws of Kenya, provides specific regulations for real estate agents and brokers. While it doesn't explicitly address finders' fees, it establishes a framework for the conduct of real estate transactions, which is relevant to the context of finders' fee agreements.

Essential Elements of a Real Estate Finders Fee Agreement

2.1. Parties to the Agreement

The agreement should clearly identify the parties involved:

• The Finder: The individual or entity who introduces the buyer or seller to the property.

• The Client: The party who engages the finder's services, typically the buyer or seller of the property.

2.2. Subject Matter of the Agreement

The agreement should clearly define the property subject to the finder's fee. This includes:

• Property Description: A detailed description of the property, including its location, size, and any relevant features.

• Property Ownership: Confirmation of the property's ownership and any encumbrances.

2.3. Finder's Fee

The agreement should specify the finder's fee, which is the compensation payable to the finder for their services. This should include:

• Fee Amount: The specific amount of the fee, which can be a fixed sum, a percentage of the property's sale price, or a combination of both.

• Fee Calculation: A clear explanation of how the fee will be calculated, including any applicable deductions or adjustments.

2.4. Payment Terms

The agreement should outline the payment terms for the finder's fee, including:

• Payment Schedule: The timeframe for payment, such as upon completion of the transaction or upon a specific date.

• Payment Method: The preferred method of payment, such as bank transfer or cheque.

2.5. Duties and Responsibilities

The agreement should clearly define the duties and responsibilities of both parties:

• Finder's Duties: The finder's responsibilities, such as identifying potential buyers or sellers, facilitating negotiations, and providing relevant information.

• Client's Duties: The client's responsibilities, such as providing accurate information about the property, cooperating with the finder, and completing the transaction within a reasonable timeframe.

2.6. Termination Clause

The agreement should include a termination clause outlining the circumstances under which the agreement can be terminated, such as:

• Breach of Agreement: Termination due to a breach of the agreement by either party.

• Mutual Agreement: Termination by mutual consent of both parties.

2.7. Dispute Resolution

The agreement should specify a mechanism for resolving any disputes that may arise between the parties, such as:

• Negotiation: Attempting to resolve the dispute through amicable negotiation.

• Arbitration: Referring the dispute to an independent arbitrator for resolution.

• Litigation: Resorting to legal proceedings in a court of law.

Conclusion

A well-drafted Real Estate Finders Fee Agreement is crucial for ensuring clarity and protecting the interests of all parties involved. By incorporating the essential elements outlined above, the agreement can provide a solid legal foundation for the finder's services and the subsequent real estate transaction. It is advisable to seek legal counsel to ensure that the agreement complies with all applicable laws and regulations in Kenya.