Broker Disputes in Dubai

A broker's own exposure is rarely discussed until it becomes a problem. The introduction was made and the client went direct. The agency agreement expired a week before the transaction closed. Two brokers both say they brought the buyer. Or a seller passed on information that turned out to be wrong and the buyer is now looking at the broker rather than the seller.

I advise brokers and brokerage firms in Dubai on commission entitlement, agency agreements and liability, and I advise buyers and sellers on the same disputes from the other side.

What actually decides a commission dispute

In almost every commission dispute I see, both sides agree the broker was involved. The disagreement is about what was agreed and what can be shown.

Brokerage in Dubai is governed by Bylaw No. 85 of 2006 regulating the Real Estate Brokers Register, alongside the standard DLD forms: Form A between broker and seller, Form B between broker and buyer, and Form F as the sale contract between the parties themselves. A signed and registered form is the strongest evidence a broker can hold, and its absence is the most common reason a claim becomes difficult.

Two things that circulate widely are worth correcting. Bylaw 85 does not cap commission at two percent, and it contains no "three broker rule". Both are repeated often enough in the market that people rely on them, and neither appears in the text of the instrument.

When more than one broker claims the same deal

Where a client engages several brokers for the same transaction, the broker who concludes the transaction is the one entitled to the fee. That sounds simple and is not, because concluding a transaction and introducing the party who eventually buys are two different things, and the record rarely makes clear which broker did which.

Where several brokers are engaged on one contract they may be jointly liable, and where one broker acts for both buyer and seller, both parties can be responsible for the fee even if they agreed between themselves that only one would pay it.

Agency agreements and exclusivity

An exclusive listing and an open listing produce different disputes. The exclusive arrangement raises questions about what happens when the owner sells privately or through another agent during the term. The open arrangement raises questions about who introduced whom and when.

The most common problem is neither of those. It is an agreement that expired while the transaction was still moving, with everyone continuing to work as though it had not.

Broker liability

A broker can be held responsible for loss caused by fraud or deceit, or by failing to observe the Bylaw and the code of professional ethics. A broker can also forfeit the right to a fee entirely by acting in the interest of the other party or by accepting a benefit from them.

Passing on information given by a seller is where brokers are most often exposed without realising it. What was said, whether it was presented as the seller's statement or as the broker's own, and whether it was recorded in writing all matter more than the accuracy of the information itself.

Bylaw 85 also establishes a Permanent Real Estate Brokerage Committee, which can caution a broker, suspend activity or place a broker on a blacklist. A dispute that reaches the Committee is a different problem from a dispute about money.

What to gather before anything else

The documents that decide these matters are the ones created before the dispute began. The signed Form A or Form B, the dated introduction, the written confirmation of what was agreed on commission, and the message trail from the period when the relationship was still working.

A broker who can show when the buyer was introduced and what was agreed at that point is in a very different legal position from one relying on what was understood at the time.