Why Commission Always Causes Disputes
Not because parties are dishonest, but because agreements are underspecified. Five percent of the deal sounds clear but hides many questions: five percent of what, due when, and what if the contract is cancelled after two months?
Three Calculation Bases
- Percentage of contract value: Most common in brokerage. Clear but ignores whether money was actually collected.
- Percentage of collected: Fairest for ongoing management — commission accrues with each payment received.
- Fixed amount: Suits defined services like marketing or inspections.
Questions the Agreement Must Settle
- Percentage before or after expense deduction?
- Does it include VAT or apply to the pre-tax amount?
- Due at signing or at collection?
- Does it cover renewals or new contracts only?
- What if the contract ends early — is any portion refunded?
- If multiple agents participated, how is it split?
The last point is most often overlooked and causes the worst internal disputes.
Clawback: The Forgotten Clause
If a contract is cancelled two months after full commission was paid, an amount must be returned. Without this clause, recovery becomes an awkward negotiation instead of an agreed procedure.
The Necessary Accounting Separation
Commission is your office's actual revenue, unlike collected rent which is held in trust. Mixing them makes profitability impossible to determine.