The broker is essentially known in Maltese as the ‘sensar’, who is;
“a person engaged by another person to assist in negotiations with a third party. The sensar is to remain impartial, working in the interest of both parties independently and must disclose all vital information to each of the parties.”
The Maltese courts have established three fundamental principles for a person to be considered a broker and consequently to have the right of brokerage.
These are:
- Conclusion of prospective negotiations
- Involvement of the broker which was either requested or has been accepted by the two parties
- The activity of the brokerage led to the parties to have idem placitu consensus, the interest of both parties are taken into consideration equally
In case where any of these three principles are missing, the broker is not entitled to any remuneration. In this case one can only per equipollens (by equivalent) claim compensation for the work done upon the legal maxim omnia labor optat premium.
The broker, who is also known as the ‘property negotiator’, has to be chosen or accepted by both parties. If he is only representing one of the parties to the transaction, then all the elements of a broker would not be present. Thus it is the broker’s responsibility to lead the parties to a definitive deal on all the conditions of the contract both the substantial elements and the incidental elements thereof.
Therefore there must be a common consensus about what is going to be sold and its conditions. There must be ‘a meeting of the minds’ through the intervention of the broker in a way that the parties can conclude the contract of sale according to those conditions agreed upon. Hence, it is up to the broker to ensure that the two parties meet. Broker remuneration should not be given if there is no conclusion of the contract, or in cases when just information is given by the broker and nothing else is done. This is the risk that a broker faces.
The law with regards to reimbursement of the broker stipulates that in the absence of any agreement, the percentage is of two per centum (2%) on the sale price. Nonetheless if the parties agreed otherwise, it is the agreement between the parties which prevails. Therefore if the five per centum (5%) are agreed to, the consumer is obliged by law to pay such a brokerage fee. Problems arise when such an agreement has not been reduced to writing and the consumer refuses to pay. This leads to court decisions, whereby if there is no proof of such agreement the current law is applied, resulting in the broker being paid only the two per centum (2%) stipulated by law.
This shall not be construed to be as advice but shall merely serve as a description of what constitutes to be a broker. If you would like to discuss this further please do not hesitate to contact us on [email protected] .