Asking Real Estate Agents for "Kickbacks" - How Best to Deal With This?

Dear Readers,

1) From time to time, in the practice of real estate agency, a real estate agent might encounter prospective buyer or tenant who asked for "kickbacks" if he or his firm were to successfully buy or rent the property through the real estate agent's firm. And, if you don't agree to this, he or his firm would buy or rent through another estate agent who agreed to give him the "kickbacks" often innocently termed as "referral or introduction fees" for as much as 30% to even 70% of the fee!

2) Rejection of such "attempts at kickbacks" would have been easy and swift with no regret whatsoever if the intention (for "kickbacks") was made known right from the very beginning before any efforts was put into the case. But most often then not, it is only after the estate agents have put in much work, time and expenses with closure of the deals in sight that these people would start asking for the "referral fee" which if you don't agree, the un-mistaken tacit or expressed message is that: the case would be taken over by another agent who would be more than willing to give the "referral fee" as much of the works have already been done by the abandoned agent.

3) Thus, outright rejection of the requests for kickbacks is never easy and swift if the agents have already spent much time and efforts (what more, money?) to bring the deal to the threshold of closure. Do you agree?

4) So, dear readers: Tell me, what would you do if you were a professional real estate agent in that kind of situation where an outright "no" to the signing of a written undertaking to pay the "referral or introduction fee" would have meant all your time, efforts and money going down the drain? Is there an intelligent way out? Does the law (say, Sections 10 & 24 of the Contract Act 1950) offer a legal way out of this? What if, instead of going to Court, they decide to use "Debt Collectors" with underworld link to collect their "referral fees"?

5) Your comments on the above issue are most welcome. To start the ball rolling, I share herewith my views in "good faith":

1. I DO NOT think it is an intelligent response to give an outright "no" if and when you have already put in much time, efforts and expenses. Reasonably, in that kind of situation, your "no" should be expressed differently: For example, if you are given the chance to draft the written undertaking, then draft it in such a way that they cannot enforce it in law, say, use terms which do not mean that you have to pay outright - say, instead of using the word "pay", use the word "re-imburse" because re-imbursement, as far as I know, requires proof or evidence of approved expenditure of the sum to be re-imbursed. Or, if the draft undertaking comes from them, then sign it with some amendments, whenever possible, because "qualified acceptance is no acceptance" - a well-established contractual principle as codified in Sec 7 of the Contracts Act 1950 ("Act 136");
2. Worse comes to worst, particularly after you have taken a cut in your professional fee in order to persuade the Owner to accept their low offer and yet after your sacrifice, they ask you for substantial "referral fee" in written undertaking, then go to Court with them: Persuade the Court that the undertaking is void under Sections 10 & 24 of the Contracts Act 1950 as it has the illegal object of collecting "kickbacks", which should be obvious if the intended recipient of the "referral fee" is the buyer or tenant himself or a party closely related to them (e.g. spouse, brother, partner, director, share-holder, etc);
3. If instead of going to Court, they go to "Debt Collectors", then I think at the first harassment by the Debt Collector, you should get in touch with the Police for advice or at least let the Police who to look for if something were to happen to you. Giving in to the harassments by the corrupts, in my view, should never be a professional response. Let's give the corrupts a good fight!

6) Can we have more views on this issue from our readers particularly if you are professional registered estate agents. Perhaps, a MACC officer should be invited to give inputs to enlighten us all on the best ways to handle such situations.

Cheers,
Douglas GT Tan
Moderator.