NIERUCHOMOŚCI CH BECK 6/2025
SELECTED ELEMENTS OF THE REAL ESTATE BROKERAGE AGREEMENT THE ORIGIN AND ESSENCE OF REAL ESTATE BROKERAGE
Nowadays, real estate brokerage is an inseparable element of the life of every community and the development of public space. It is difficult to imagine the world around us without the possibility of broadly understood real estate trading. Professional real estate brokerage is regulated in the second chapter of the Act of 21 August 1997 on real estate management1 (“UGN”) – “(…) it is not an ordinary contract of mandate or even an agency agreement, which are regulated in the provisions of the Civil Code. The real estate brokerage agreement is a separate named contract, which means that its occurrence has been expressly provided for in the provisions of law.2” The subject of brokerage may be both the act of sale and lease, lending or leasing real estate. In this way, real estate from the primary or secondary market gains a so-called new life and another role or function to fulfill in society. The dynamics accompanying the real estate trading process translates into the development of the parties involved in the process and urban spaces.
Using the example of the sale of real estate, the case law has clearly indicated how professional real estate trading should be treated – “Since the essence of a brokerage agreement is to create an opportunity and possibility for the intermediary to conclude a real estate purchase and sale agreement by the contractors and then acquire the right to remuneration, it would be contrary to the nature of the legal relationship to consider it permissible to grant the right to remuneration to the intermediary in the case of any transaction with any contractor outside the scope of the intermediary’s activities. In such a situation, there is no basic element proper to a brokerage agreement, i.e. the association of contractors.1” This article is entirely devoted to the correct identification of real estate brokerage activities.
RESULT OR DILIGENT ACTION AGREEMENT
A real estate brokerage agreement, as mentioned above, is a contract named and regulated in the Real Estate Brokerage Act. In fact, the brokerage agreement is most similar to “(…) an agency agreement (art. 758 – 764[9] of the Civil Code), and not to a contract of mandate.1” As a result, the provisions on the limitation period referred to in art. 118 of the Act of 23 April 1964 – the Civil Code2 (“Civil Code”) apply to real estate brokerage. According to art. 179b of the Real Estate Brokerage Act, real estate brokerage consists in the paid performance of activities aimed at concluding agreements by other entities, including the acquisition or disposal of rights to real estate or cooperative ownership rights to premises and lease or tenancy agreements for real estate or parts thereof. Based on the content of the cited provision, the question arises about the actual nature of activities undertaken as part of real estate brokerage. In a result agreement, the key is to achieve the intended goal, while in the case of a due diligence agreement, the focus is on professionalism and reliability. So which of the elements prevails in the legal structure provided for a real estate brokerage agreement? The Act clearly mentions activities aimed at concluding a contract, which would suggest that the brokerage agreement is of a due diligence nature. In turn, practice shows that the payment of remuneration to the broker often takes place at the time of finalization of the real estate transaction, which could speak in favor of an interpretation in favor of the nature of the result of brokerage. In fact, the answer should be sought in the content of art. 180 of the UGN, according to which the scope of real estate brokerage activities is specified in the brokerage agreement.
“This is a very important clue in finding an answer to the question asked. It should be assumed that – as a rule – an intermediation agreement may be an agreement of due diligence, unless the parties agree otherwise. And since in the practice of business transactions, the parties most often agree differently, i.e. they make the intermediary’s remuneration dependent on the conclusion of a specific agreement, ultimately the intermediation agreement should be considered a mixed contract.1” In conclusion, it depends on the will of the parties involved how they formulate the provisions of the contract and whether they give it the character of due diligence, result or mixed. According to the case law, “the brokerage agreement provided for in art. 180 of the Act of 21 August 1997 on real estate management (consolidated text: Journal of Laws of 2004, No. 261, item 2603) is a best effort agreement that the parties may transform into a result agreement.2” The position of the case law is relatively consistent – “The scope of the broker’s duties comes down to performing activities aimed at concluding by the contractor an agreement concerning the right to real estate. The broker’s duties consist in finding and presenting the contractor with appropriate offers so that he can conclude an appropriate agreement, i.e. in creating conditions, “providing an opportunity to conclude an agreement”. (…) in real estate trading consists in performing factual, not legal, activities.3″ The legislator left interested entities free to shape the intermediation relationship in accordance with their individual needs and actual interests – in accordance with the principle of freedom of contract, the parties concluding the contract may arrange the legal relationship at their discretion, as long as its content or purpose does not contradict the nature of the relationship, the act or the principles of social coexistence (Article 353 (1) of the Civil Code). The conciseness of the provisions dedicated to real estate intermediation activities regulated in the UGN does not in any way conflict with the business intentions of the parties to the contract.
EXCLUSIVE CLAUSE
In practice, on the real estate market, one of the dominant models of real estate brokerage agreements are agreements with an exclusive clause (also commonly known as exclusive or closed agreements). According to the current line of case law, “The essence of an exclusive real estate brokerage agreement is to eliminate the possibility of using the services of another broker by the principal, and a breach of such a clause may be considered a failure to perform or improper performance of the agreement, and consequently give rise to liability for damages. However, in the case of such an agreement, the principle also applies that the broker is entitled to remuneration for actions undertaken by him that led to the achievement of the purpose for which the brokerage agreement was concluded. This conclusion results from the general assumption that the contractor is entitled to remuneration for actions that, in the light of the obligation relationship between the parties, may be considered as the performance of the obligation by him.1” Due to the brevity of the legal provisions dedicated to the regulation of real estate brokerage in the UGN, the parties may freely shape the content of the exclusive real estate agreement through the prism of the criterion of the principle of freedom of contract. This means that the parties may shape the content of the brokerage fee at their own discretion, provided it does not conflict with the law or the principles of social coexistence. In practice, the custom has developed for the parties to indicate an exclusivity clause in the title of the contract, but only the relevant provisions of the brokerage agreement, and not its description, determine the nature of the contract.
It is worth adding that the exclusivity clause in the context of real estate brokerage is not an entirely new solution, because it already appears in the provisions of the Civil Code in two cases: (i) the exclusivity clause reserved in art. 550 of the Civil Code for a sales contract and (ii) the exclusivity clause reserved in art. 761 par. 2 of the Civil Code for an agency contract. Before the deregulation of the profession of brokerage, in accordance with the content of the repealed provision of art. 180 sec. 3a of the Real Estate Management Act, the brokerage contract could be concluded with an exclusivity clause in the meaning of exclusivity reserved for a sales contract. Ultimately, this provision lost its validity and the parties, as of 1 January 2014, i.e. the entry into force of the Act of 13 June 2013 amending the acts regulating the performance of certain professions1, may freely arrange the contractual relationship, provided that it does not conflict with the elementary assumptions of freedom of contract – art. 353 (1) of the Civil Code. An example could be the course of the boundary in the event of withdrawal from the brokerage agreement, i.e. until which moment the consumer has an effective right to withdraw from real estate brokerage. In accordance with the position of the District Court in Gliwice of January 27, 2023 – “(…) The Court came to the conclusion that the consumer abused the right within the meaning of Art. 5 of the Civil Code by submitting a declaration of withdrawal from the agreement after being shown the real estate by the broker, which he ultimately decided to purchase. In accordance with Art. 5 of the Civil Code, one cannot make use of one’s right in a way that would be contrary to the socio-economic purpose of this right or to the principles of social coexistence.”
Currently, “we can draw up a contract as agreed with our client, provided that it does not violate the provisions of the Act (e.g. provisions on trade with consumers), or the principles of social coexistence, or that the contract is not contrary to the essence of the intermediation relationship.1” When drafting an exclusivity clause in an intermediation agreement, special attention should be paid to the construction of a contract with a consumer, who is protected by the provisions of the Civil Code, the Act of 30 May 2014 on consumer rights2 or the register of unfair terms in the register of the Court of Competition and Consumer Protection (this register includes provisions resulting from ongoing proceedings initiated before 17 April 2016). In fact, an intermediation agreement concluded with a consumer with a reservation of exclusivity is contrary to the principles of social coexistence if its provisions violate such values as the balance of the parties, professionalism or reliability of the parties. An exclusivity clause in real estate brokerage is classified as contrary to good values if it violates generally accepted patterns of behavior and abuses the position of the stronger party in relation to the weaker party in the contract. In particular, it is expected that the templates of the brokerage agreement that the entrepreneur uses towards the consumer should have transparent provisions and not violate the interests of the weaker party. In the case of brokerage agreements between entrepreneurs, although the rules and regulations protecting the consumer do not apply, the provisions of brokerage agreements with the reservation of exclusivity still cannot violate the principles of freedom of contract.
MODEL OF INTERMEDIARY REMUNERATION
The brokerage agreement is of a named and fee-based nature. As a result, the agreement should regulate the remuneration and the manner or method of its payment – the remuneration may be a specific percentage of the transaction price of the property or be expressed in a monetary amount. In the absence of a provision on remuneration in the contract, the broker is entitled to the customarily accepted remuneration for a given activity. The parties may freely shape the principles of remuneration payment, as long as they do not conflict with generally applicable legal regulations or principles of social coexistence. “In addition to the commission on the transaction price, the parties may agree, for example, on a monthly lump sum for undertaking brokerage activities described in the agreement.1” Currently, the practice of the real estate market shows that “brokerage commissions range between 1.5-3% of the transaction price (+ VAT) in the case of a purchase or sale brokerage agreement, and 50-100% of one month’s rent (+ VAT) in the case of a lease or rental brokerage agreement.”
This means that the parties can agree in two ways: (i) in the first case, in the event of withdrawal from the sale or lease (tenancy) of the property, the agent will not receive anything and (ii) in the second case, the parties agree that in the event of withdrawal from finalizing the transaction, the agent will receive at least remuneration for the services performed so far in the form of activities aimed at concluding the contract – “The agent performed the activities, and the client nevertheless terminated the brokerage agreement, so the agent had the right to demand compensation for the activities performed and the costs incurred.1” In the second case, of course, the risk of the agent not paying for the effort is lower, but potential clients are less willing to conclude a brokerage agreement on the indicated terms. Therefore, one cannot rule out a situation in which there were engaged negotiations between the interested parties, the agent found a buyer willing to pay the agreed amount of money, a negotiation protocol or a preliminary real estate sale (tenancy) agreement was signed, and the selling (renting) party unexpectedly withdraws from the transaction.
Although there is no obligation to apply the provisions of the Civil Code to named contracts, i.e. the brokerage contract regulated in the UGN, practice shows that in the above-described circumstances intermediaries try to invoke the legal basis in the form of art. 750 of the Civil Code dedicated to contracts for the provision of services in connection with art. 746 of the Civil Code on termination of a contract for services. According to art. 746 par. 1 of the Civil Code, the person giving the order may terminate it at any time; however, he should reimburse the person accepting the order for the expenses incurred by the latter in order to properly perform the order; in the case of a paid order, he is obliged to pay the person accepting the order a part of the remuneration corresponding to his previous activities, and if the termination occurred without a valid reason, he should also repair the damage. The structure of the cited provision clearly indicates that “the basic purpose of the norm expressed in art. 746 § 1 of the Civil Code is to protect the interests of the contractor by redressing the damage suffered as a result of early termination of the contract without a valid reason.1” Of course, each case requires an individual examination of the accompanying circumstances considered individually for each case. However, one should be very careful, because “the regulation of the brokerage agreement brings it most closely to an agency agreement (Article 758-764 of the Civil Code), and not to a contract of mandate. It concerns the performance of factual, not legal, actions, as is the case in a contract of mandate, and besides, the broker acts independently and is not obliged to follow the instructions of the principal, the direct purpose of his actions is not to produce a specific legal effect, but to create conditions in which the conclusion of the agreement is possible with the participation of the interested parties themselves, and the right to remuneration is acquired only when the conditions created by him lead to the conclusion of the agreement.2” It should not be forgotten that the current legislation on the brokerage agreement in the UGN is very economical in nature, which is why the parties often reach for already developed legal tools functioning within the framework of other named contracts, provided that there are no obstacles to their use.
In conclusion, the lack of finalization of the sale or lease (rent) transaction of real estate does not automatically mean the lack of payment of remuneration to the real estate agent. Whether there are actual grounds for payment to the agent will depend primarily on the construction of the provisions of the brokerage agreement and the reliable transmission of the intentions of the parties to the contract (the obligation of the agent to take actions is not the same as the obligation to lead to the conclusion of the transaction agreement).
STATUS OF AN INTERMEDIARY AND OTHER LEGAL ISSUES
According to the definition contained in art. 179a of the Real Estate Management Act, a real estate agent is an entrepreneur conducting business activity in the field of real estate brokerage – “Practically all elements of brokerage make up the definition of business activity, which is why it was proposed that activities in the field of brokerage or property management could be performed by entrepreneurs. Therefore, since an entrepreneur is currently an intermediary, then – a contrario – a person who is not an entrepreneur cannot be an intermediary.1” An intermediary should have insurance for professional activities strictly related to the performance of the profession of a real estate agent. In the event of damage, the intermediary will be liable for failure to perform or improper performance of the obligations arising from the brokerage agreement – contractual liability specified in art. 471 of the Civil Code. As a result, seeking possible compensation from the intermediary is possible in the event of damage on the part of the client (consumer) and a causal relationship between the damage and the conduct of the intermediary. This does not exclude pursuing claims based on other legal provisions, e.g. tortious liability for an unlawful act specified in art. 415 of the Civil Code, e.g. theft or property fraud, or criminal liability in the event of committing a crime prohibited by law.
Among the few legal requirements for real estate brokerage agreements, one must not forget about the written or electronic form under pain of invalidity stipulated in art. 180 sec. 3 of the Real Estate Brokerage Act. “According to the provision of art. 73 par. 1 of the Civil Code, if the act stipulates written, documentary or electronic form for a legal act, an act performed without observing the stipulated form is invalid only if the act stipulates the penalty of invalidity. Failure to observe the statutory form therefore results in the invalidity of the legal act.2” In practice, this means that a brokerage agreement concluded in oral or implied form (even in the presence of witnesses) will not have legal force. It is necessary to sign it personally by the owner (perpetual user) of the property and a professional broker; alternatively a qualified electronic signature. Due to the requirement of written or electronic form of the contract in the UGN, the exchange of signed scans of documents, e.g. as part of email correspondence, will not meet the requirement of the proper form of the contract. A real estate brokerage agreement should contain the necessary elements constituting its essence: (i) detailed designation of the parties to the contract (ii) precise definition of the parameters identifying the property (iii) the period of conclusion and modes of termination of the contract and clarification of the nature of the contract, e.g. brokerage agreement with reservation of exclusivity (iv) obligations of the parties involved, etc. A reliable regulation of key legal and factual issues will allow the parties to eliminate unnecessary disputes or conflicts.
In the real estate market, many cases appear that even professionals cannot predict. One of such situations should be classified as the so-called primary impossibility to perform, which, according to the prevailing line of case law, leads to the invalidity of the contract – “A contract that cannot achieve the purpose for which it was concluded, i.e. the sale of real estate or its lease by a person who is not the owner of the property should be considered invalid, as contrary to the nature of the relationship in accordance with art. 3531 of the Civil Code in connection with art. 58 § 1 and 2 of the Civil Code.1” When assessing the provisions constructing the brokerage agreement, one should remain particularly vigilant in the event of the consumer’s participation in the brokerage relationship. In the context of the exclusivity clause, it has already been pointed out that the consumer deserves protection from civil law provisions and legal regulations dedicated to consumer protection. The case law clearly indicates that “Abusive are those contractual provisions that do not provide for the possibility of the consumer submitting a declaration of intent not to extend the contract.2” In the case of the consumer’s participation in the real estate brokerage relationship, legal protection is of an increased nature due to the unequal relationship between the broker (professional) and the client (consumer). SUMMARY The profession of a broker is still popular and carries the promise of participation in exciting projects or large real estate transactions and the chance for lucrative earnings. The work of a broker should definitely be characterized as dynamic and full of new professional challenges, especially for committed and ambitious individuals. Due to the constant development of the real estate market and the demand for professional entities oriented in the residential or commercial sector, a more comprehensive regulation of key issues dedicated to real estate brokerage seems to be a reasonable solution.
Alicja Sławińska Managing partner ALICJA SŁAWIŃSKA AS LAW FIRM
attorney at law
