3.1 Commission: When It Is Earned, Customary Rates, and Discipline for Misconduct
Key Takeaways
Commission is set by agreement; without agreement it follows prevailing practice, and DLD confirms no statutory commission rate exists (Article 27 of Bylaw No. 85 of 2006).
A broker earns commission only if a contract is concluded, and by default upon signing the sale contract and registering it with DLD (Article 28).
If both buyer and seller appoint the same broker, each pays its own share even if they agree that one will pay it all (Article 33).
A broker who acts in the other party's interest or accepts a promised benefit from it in bad faith forfeits remuneration (Article 23).
A developer or broker who helps a client evade DLD fees faces a fine of double the fee (Executive Council Resolution No. 30 of 2013, Article 6).
3.1 Commission: When It Is Earned, Customary Rates, and Discipline for Misconduct
Commission questions test whether you can separate what the law says (Bylaw No. 85 of 2006) from what the market customarily does. Most wrong answers on the exam quote a market custom as if it were a legal rule, or invent a rule the law does not contain.
1. Five conditions for an enforceable fee
| Condition | Source |
|---|---|
| 1. The broker is licensed and registered | Article 3 of the Bylaw; DLD's FAQ says a broker loses the right to commission if not licensed by RERA |
| 2. There is a written brokerage agreement naming the parties, describing the property and stating the terms | Article 26 (in practice Form A or Form B) |
| 3. A contract between the parties is concluded: all parties agree on all the conditions in the brokerage agreement | Article 28(1) |
| 4. By default, the sale contract is signed and registered with DLD, unless the brokerage agreement sets another trigger | Article 28(2); repeated in DLD's FAQ |
| 5. If the sale is conditional (for example on mortgage approval), the condition is fulfilled | Article 28(3) |
Two related rules complete the picture:
- Termination of the brokerage agreement (Article 29): the broker may still claim the agreed remuneration unless the broker committed fraud or gross negligence. This is why clients cannot simply cancel a mandate to avoid paying for a deal the broker produced.
- Failed negotiations (Article 30): if the broker's efforts do not lead to a contract, the broker cannot claim compensation or expenses unless the brokerage agreement provides for them.
Important
The amount is a matter of agreement. Article 27 says remuneration is determined by agreement and, if there is none, by prevailing practice. DLD's FAQ states the same. There is no legal maximum or minimum commission in Dubai.
2. Customary rates (market practice, not law)
| Transaction | Customary practice |
|---|---|
| Resale (secondary) purchase | About 2% of the price, commonly paid by the buyer; negotiable and must be written in Form A or Form B |
| Residential lease | Commonly about 5% of the annual rent, or a fixed fee agreed in writing |
| Off-plan sale by a developer | The developer pays the broker under a marketing agreement that must be registered with DLD (Executive Council Resolution No. 6 of 2010, Article 10) |
| VAT | Commission is a taxable service: a VAT-registered brokerage adds 5% VAT (see 3.4) |
3. Several brokers on one deal
- Working together for one side (Article 31): if several brokers act for the same party and the contract is concluded, they share the fee as if they were one broker, according to their arrangement. Co-broking between a listing agent and a buyer's agent is documented in Form I, which records the split.
- Hired separately (Article 32): if a client engages several brokers independently and one succeeds, that broker takes the whole fee.
- Who pays (Article 33): each party pays the broker it appointed. If both parties appoint the same broker, each is severally liable for its own share, even if they agree that one of them will bear the whole fee.
4. Acting for both sides and conflicts
The Bylaw does not ban acting for both buyer and seller (Article 33 assumes it can happen), but it controls the conflict:
- Disclosure (Articles 17 and 19): the broker must keep the client informed of every stage of negotiation and disclose substantial matters to the other party.
- Forfeiture (Article 23): a broker who acts in the other party's interest or accepts a promised benefit from it, contrary to good faith or the ethics code, loses the right to remuneration and expenses.
- Broker as buyer or seller (Article 20): a broker may not become the second party to the contract being brokered unless a party authorises it, and then no remuneration is due.
Good practice is to disclose the dual role in writing at the start and to record each party's fee in its own Form A or Form B.
5. Discipline and penalties
| Tool | Source | Notes |
|---|---|---|
| Notice, warning, suspension of up to 6 months, blacklisting | Article 39 of the Bylaw | Imposed by the Committee, in addition to penalties in other laws |
| Cancellation of registration | Article 40 | For breach of the ethics code, a gross violation, or 3 black points; grievance to the Chairman within 15 days, whose decision is final |
| Warnings, fines and black points in current practice | DLD FAQ | Some violations draw a warning and then a fine if repeated; others draw a direct fine; black points apply to offices and brokers |
| Advertising fines | DLD announcements | DLD has described advertising fines as a progressive AED 50,000, which can lead to licence cancellation |
| Helping a client evade DLD fees | EC Resolution No. 30 of 2013, Article 6 | Fine of double the evaded fee, also applied to a developer or broker who assists |
| Civil liability | Article 22 | Broker liable for loss caused by fraud, deceit or breach of the rules |
A classic fee-evasion example is understating the price in the registered contract while a side payment covers the difference. The broker who arranges it risks the double-fee penalty, disciplinary action and civil liability.
A buyer and seller sign Form F, but three days before transfer the buyer walks away. The seller's Form A says nothing about default. The broker demands the full 2% from the seller. What does Bylaw No. 85 of 2006 provide by default?
The broker may deduct 2% from the buyer's deposit without anyone's approval
The broker is entitled by default only when the sale contract is signed and registered with DLD, so without an agreed alternative trigger no commission is due from the seller
The broker may collect the full fee from the buyer through a police complaint
The broker may block the seller's title deed at DLD until paid
A buyer and a seller both appoint the same broker. They agree between themselves that the seller will pay the entire commission. If the seller fails to pay, what is the buyer's exposure under Article 33 of Bylaw No. 85 of 2006?
None: the private agreement between the parties binds the broker
The buyer must pay the whole commission because the seller defaulted
The broker can claim nothing because acting for both sides is illegal
Each party is severally liable for its own share of the remuneration, so the buyer remains liable for the buyer's share
A seller's broker secretly accepts an AED 25,000 bonus from the buyer for persuading the seller to accept a lower price. Under Bylaw No. 85 of 2006, what is the consequence for the broker's commission from the seller?
The broker keeps the commission because the sale completed
The commission is reduced by AED 25,000 only
The broker must transfer the bonus to DLD and keeps the commission
The broker forfeits the right to remuneration and expenses for acting in the other party's interest and accepting a benefit from it, and is liable for the loss caused
Which list correctly states the penalties the Committee may impose under Article 39 of Bylaw No. 85 of 2006?
Notice, warning, suspension of activity for up to six months, or blacklisting
A fixed fine of AED 5,000 to AED 50,000 only
Imprisonment of up to one year
Suspension for up to five years and confiscation of the office
Sections you finish are checked off in the contents.