Real Estate Agency Commission Disputes in Kenya

Disputes between property owners and estate agents over commission are among the most common disagreements in Kenya’s real estate sector, usually arising when a seller or landlord tries to avoid paying commission after a sale or letting closes, or when more than one agent claims to have introduced the buyer or tenant. This article focuses specifically on when commission becomes payable and how disputes over it are resolved, rather than on the registration requirements for estate agents themselves, which we cover separately.

When Commission Becomes Payable

The Estate Agents Act (Cap 533) regulates who may practise as an estate agent in Kenya, but it does not itself set out a general rule for when commission becomes due; that is governed by the agency agreement between the agent and the client, read against ordinary contract law principles. In practice, most disputes turn on whether the agent’s introduction was the effective cause of the eventual transaction. Where an agent introduces a buyer or tenant who is ready, willing and able to complete on the terms instructed, and the transaction later proceeds, even if it closes directly between the owner and that buyer without the agent’s further involvement, the agent will usually have a strong claim to commission, provided the agency agreement supports that reading. Conversely, where a deal falls away and the same property is later sold to the same buyer through a different route entirely, or after the agency has genuinely ended, the original agent’s claim becomes much weaker.

Because the Act leaves this to contract, the single most important document in a commission dispute is the written agency agreement or instruction letter setting out the property, the agent’s authority, the commission rate, and the circumstances that trigger payment. An owner who instructs an agent informally, without agreeing these terms in writing, makes any later dispute over entitlement far harder to resolve, for both sides.

Registration and Its Effect on a Commission Claim

Section 18 of the Estate Agents Act makes it an offence for an individual to practise as an estate agent, or for a partnership or company to practise as estate agents, unless the individual, or the relevant partners or directors, are registered under the Act. The penalty on conviction is a fine of up to twenty thousand shillings or imprisonment for up to two years, or both. The Act does not include an explicit provision barring an unregistered person from suing to recover commission in court, unlike some comparable statutes in other jurisdictions. That said, because section 18 makes unregistered practice a criminal offence, an unregistered person seeking to enforce a commission agreement may face an argument that the underlying agreement is unenforceable on grounds of illegality, since the agreement was for services the provider was not lawfully entitled to render. Anyone engaging, or working as, an estate agent should treat registration status as a live issue in any commission claim, not a formality.

The Prescribed Scale of Fees

The Estate Agents (Remuneration) Rules, 1987, made under the Act, set out a scale of fees that registered estate agents may charge, structured as a sliding percentage of the transaction value. For a sale, the scale applies a higher percentage to the first tranche of the price and progressively lower percentages above that, with a materially lower scale for an agent acting for a purchaser rather than a seller. Separate scales apply to letting transactions, generally expressed as a percentage of the first year’s rent for shorter leases and as a fixed number of months’ rent for longer leases, and to ongoing property management, expressed as a percentage of gross rent collected. In practice, most agency agreements today expressly agree a commission rate with the client rather than relying on the 1987 scale, which is dated, but the scale remains relevant as a benchmark and as the default where no rate has been agreed, and a court or the Estate Agents Registration Board may refer to it in assessing whether a claimed fee is reasonable.

Resolving a Commission Dispute

A commission dispute can be pursued in two different ways, which are not mutually exclusive. First, a client who believes an agent has acted unprofessionally, for example by overcharging, misrepresenting its role, or acting for both sides of a transaction without disclosure, can lodge a complaint with the Estate Agents Registration Board, which under sections 23 and 24 of the Act can inquire into an agent’s conduct and, if satisfied that misconduct occurred, caution the agent, impose a fine of up to five thousand shillings, suspend the agent’s registration, or strike the agent off the register. This route addresses professional discipline rather than recovering money for the client.

Second, and separately, either party can pursue the commission itself as a straightforward contractual claim: the agent suing for unpaid commission it says it earned, or the client suing to recover a commission it says was not properly earned or was overcharged. Because these are ordinary contract claims, they are generally heard in the civil courts according to the value in dispute, and the outcome depends on the wording of the agency agreement, the evidence of what work the agent actually did, and, where relevant, the 1987 scale as a benchmark for reasonableness. Clear records, in particular the written instruction, correspondence showing who introduced the eventual buyer or tenant, and any invoices issued, are decisive in these cases far more often than the general provisions of the Act itself.