Conjunction sales and referral fees: when two agents share a commission

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Kooky

Builder of Shaka, the payment router that pays every agent their commission on closing date.

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A seller appoints one agency. The buyer, as it turns out, comes from another: a firm across town that had the right person on its books and rang to ask whether it could bring them through. The home sells, one commission is paid, and two agencies divide it. That is a conjunction sale, and it is among the oldest forms of cooperation in real estate.

A referral looks similar from a distance and works differently. An agent in Cairns whose client is moving to Brisbane passes the client's name to a Brisbane agency, takes no further part, and receives a fee if a sale follows.

Both arrangements are lawful in Queensland and both are useful. They allow a small agency to reach buyers it could not find alone, and they let an agent look after a client whose needs lie outside the agent's own patch. They also raise questions that an ordinary sale does not. Who is the second agency working for? What must the seller be told, and the buyer? What happens to the fee if the deal changes shape? This guide sets out how the Real Estate Institute of Queensland, the Office of Fair Trading and the courts answer them.

Conjunction and referral: two different arrangements

The REIQ distinguishes the two in its guidance to members.

A conjunction, it explains, is an arrangement between two agencies to bring about one sale. In the usual case, agency one is appointed by the sellers as the listing agent and lists the property. Agency two supplies a buyer.

A referral is when an agency refers a potential client, who may be a seller or a buyer, to an agency in a different location or market, or for a different kind of service. The referring agent may then receive a referral fee or a percentage of the commission from a successful transaction.

The difference lies in what the second party does. In a conjunction both agencies work on the same sale. In a referral one agency hands over a client and steps back, and the receiving agency does all the work under its own appointment.

The third row is included because it is the arrangement a conjunction is most often mistaken for. It is dealt with further below.

Whose agent is the second agency?

The point the REIQ presses hardest concerns loyalty. In a conjunction, it says, agency two will not be appointed to act on behalf of the buyer, and therefore must not provide property services to the buyer.

This runs against intuition. The conjunction agency found the buyer, has usually dealt with that buyer for some time, and may know their budget and their preferences. It would be natural for the buyer to think of that agency as theirs.

It is not. The only client in the transaction is the seller, who appointed the listing agency. The conjunction agency shares in a commission paid by the seller and has no appointment from anyone else. The REIQ's guidance is that it must avoid representing the buyer or suggesting that it stands in a relationship of trust with them.

The practical consequences are worth spelling out. A buyer introduced through a conjunction is dealing with two agencies, both of which are paid from the seller's side. What the buyer tells either of them about how high they might go is being told to people who are remunerated by the seller. A buyer who wants someone acting in their own interest needs a different arrangement, made by a separate appointment.

For agents, the rule is a boundary to keep in view. A conjunction agent may introduce, show and communicate. Advising the buyer on what to pay moves into acting for them, which the arrangement does not permit.

One commission, divided

A conjunction does not create a second commission. The seller agreed a figure with the listing agency on the appointment, and that figure is what the seller pays.

The Office of Fair Trading's guidance on charging commission makes the underlying rule clear: the commission is set in writing at the time of the appointment and cannot be altered afterwards. The arrival of a second agency does not change the form. What the listing agency does with its fee, including sharing it with a conjunction partner, is a matter between the two agencies.

The division itself is entirely a matter of agreement. No Queensland rule fixes a split, and published cases show that the proportions vary with who brought what. In Equity 2 Pty Ltd v Best Price Real Estate Pty Ltd [2020] QDC 180, a District Court decision of 3 August 2020 concerning development sites at Labrador on the Gold Coast, the written conjunction agreement gave 66.6 per cent of the commission to the agency that introduced the buyer and 33.3 per cent to the listing agency. That is one agreement between two firms about one property, not a norm, but it shows that the introducing agency's share may be the larger one.

A worked example shows the arithmetic. The figures are illustrative. Suppose a listing agency is appointed at a commission of $22,000 including GST and agrees an equal conjunction split. Each agency's share of the commission is $11,000. The seller still pays $22,000. Each agency then pays its own salesperson according to its own employment arrangements, so the individual agents each receive a portion of half a commission.

That is the economic bargain at the centre of every conjunction. The listing agency gives up part of its fee in exchange for a buyer it did not have. Half a commission on a sale that happens is worth more to it than a whole commission on a sale that does not.

The agreement between the two agencies

Because the split rests on agreement, the agreement should be in writing. The REIQ publishes standard documents for its members for this purpose: a conjunction agreement, which it numbers EF032, and a referral agreement, EF032A.

The Equity 2 case shows how much turns on what the document says, and it rewards a careful reading.

Two agencies agreed to share commission on the sale of the Labrador sites. Their written agreement named the prospective purchaser, a company the conjunction agency had introduced in late 2019. A contract with that company was signed, then failed when finance could not be arranged. The sites were later sold to a different company on different terms.

The conjunction agency claimed its share all the same, on the footing that its introduction had started the process. Judge Kent rejected the claim. The agreement was unambiguous: commission was shared on a sale to the named prospective purchaser, and that sale had not happened. The court declined to imply a wider term requiring the agencies to cooperate in good faith so as to protect the introducing agency, finding such a term neither necessary to make the agreement work nor consistent with what the document expressly said. And it found no sufficient causal link between the conjunction agency's work and the purchase by the second company. The listing agency obtained summary judgment.

Several terms emerge from the decision as the ones that matter:

• which property, and which buyer, the agreement covers;
• the share each agency takes, and of what amount;
• the event that triggers payment, and when the listing agency must pay it over;
• what happens if the named buyer drops out and a related or different buyer later purchases;
• how long the arrangement lasts.

An agreement that answers those in writing leaves little to argue about. One reached in a telephone call and confirmed by a text message may leave a good deal.

How a referral fee works

A referral is simpler in structure because the referring agent does not take part in the sale.

In the REIQ's description, the referring agency passes a potential client to an agency elsewhere. That agency is then appointed by the client in the ordinary way, on its own form, at a commission it negotiates. If a transaction results, the receiving agency pays the referrer what was agreed, as a set fee or as a percentage of the commission.

As with a conjunction, the client's cost is the commission on the appointment they sign. The referral fee comes out of the receiving agency's income.

Referrals are common in a state as large and as mobile as Queensland. An owner leaving Townsville for the Sunshine Coast may ask a trusted local agent to recommend someone at the other end. An agency that sells houses may refer a commercial enquiry to a specialist. The referring agent's reward is for the relationship and the introduction, and the client gains a recommendation from someone they already know.

The questions to settle in writing are similar to those in a conjunction: who was referred, for what transaction, what is payable and when, and for how long the referral stays live. A client referred in January who lists in November, after speaking to several other agents, is the kind of case a well-drawn agreement anticipates.

What the buyer must be told

Money that passes between agencies is of interest to more people than the agencies. Queensland requires agents to disclose benefits that buyers would not otherwise see.

The Office of Fair Trading's guidance on disclosing interests says that fees, commissions or other benefits involving third parties must be communicated to potential buyers. Its examples of such third parties include mortgage brokers, inspectors, marketing firms and other agents.

The REIQ sets out the detail for its members. An agent must disclose to a prospective buyer any relationship, personal or commercial, with an entity to which the agent refers the buyer for professional services, and the amount, value or nature of any benefit the agent has received, receives or expects to receive in connection with the sale or the referral. The disclosure is made on an approved document, Property Occupations Form 8, and must be given before the contract is signed.

The sanction is significant. The REIQ puts the maximum penalty for a breach of section 157 of the Property Occupations Act, the disclosure provision, at 200 penalty units, and notes that a false representation can attract up to 540 penalty units under section 212. The Office of Fair Trading lists the consequences of failing to disclose an interest as including repayment of commission, fines, conviction and imprisonment.

The REIQ's general advice to members is to disclose conservatively. Consumer law prohibits misleading conduct, silence about a material fact can mislead, and a buyer who later learns of an undisclosed benefit is likely to complain.

Referrals to other service providers

The same disclosure rule covers a different and more frequent kind of referral: the agent who suggests a mortgage broker, a building inspector, a conveyancer or a removalist to a buyer.

There is nothing improper in the suggestion. Buyers often ask for one, and a local agent knows who is reliable. The rule bites when the agent has a relationship with the business or stands to gain from the recommendation. A commission from a broker for each loan written, a fee from an inspector for each booking, or an ownership interest in the business recommended are all benefits a buyer would want to know about when deciding whether to take the advice.

The REIQ's description of the relationships that must be disclosed is broad. It includes family ties, business connections and other relationships of trust or direction. The benefit need not be cash: its amount, value or nature must be stated, which reaches non-monetary rewards as well.

For the agent, the principle is straightforward. A referral that is disclosed is a service to the buyer. One that is paid for and not disclosed is a breach.

Licences and the people in the chain

Sharing commission raises the question of who is allowed to receive it, and Queensland's licensing law supplies the frame.

The District Court considered the point in Podium Project Marketing Pty Ltd v B Global (Aust) Pty Ltd [2024] QDC 219, decided on 12 December 2024. A developer had appointed a marketing agency, which in turn used two sub-agents to find buyers. The people at the sub-agents who actually dealt with buyers were not licensed or registered. The developer argued that the agency should therefore lose its commission.

The court held otherwise. Section 89 of the Property Occupations Act, it explained, prevents an agent recovering commission unless the agent was licensed, was authorised under the licence to do the work and was properly appointed by the client. The section looks at the agent who makes the claim. It did not cancel the appointed agency's commission because others down the chain lacked registration. The court noted, however, that the Act deals with unlicensed work elsewhere: section 97, it said, makes it an offence to act as a property agent without the proper licence or authorisation.

Two points follow for conjunctions and referrals. The agency that holds the appointment is the one entitled to claim the commission from the client, and it must have its own licence and appointment in order. And the fact that the appointed agency keeps its commission does not make unlicensed work by others lawful. Agencies entering a conjunction have good reason to confirm that the firm on the other side is properly licensed in Queensland.

How a buyer's agent differs

A buyer's agent is sometimes described loosely as working in conjunction with the selling agent. The legal structure is the opposite of a conjunction.

A buyer's agent is appointed by the buyer, in writing, and acts for the buyer. The fee is agreed with the buyer and paid by the buyer. The selling agent keeps the whole of the commission the seller agreed. The two professionals sit on opposite sides, each with their own client, and neither shares the other's fee.

The contrast with a conjunction is exact. A conjunction agent has no appointment from the buyer and may not act for them; a buyer's agent has precisely that appointment and that duty. The disclosure rules explain why the line is kept so firmly. A person who is paid from the seller's commission while appearing to advise the buyer would be in the position the law is designed to prevent.

Where conjunctions come unstuck

The published cases and the REIQ's guidance point to a small number of recurring problems.

The first is an arrangement that was never written down, or written too loosely to say which buyer and which sale it covers. The Equity 2 decision is the standard warning.

The second is a change in the deal: a named buyer replaced by a related company, a contract that fails and is revived on new terms, a sale completed after the listing agency's appointment has been renewed. Each raises the question of whether the original agreement still applies.

The third is a blurring of roles, where the conjunction agent drifts into advising the buyer.

The fourth is disclosure overlooked because both agencies assumed the other had attended to it.

None of these is a reason to avoid cooperation. Conjunctions and referrals widen the pool of buyers for sellers and spread work among agencies of different sizes and specialities. They work best when the paperwork matches the handshake: one appointment from the seller, one written agreement between the agencies, and one disclosure to the buyer before the contract is signed.

Two agencies can share a commission. They cannot share a client: in a conjunction there is only one, and it is the seller.

Kooky, from Shaka

Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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