Property sellers could claim back millions of dollars in payments made to their real estate agents after a legal stoush between a vendor and a suburban agent exposed a glitch in Victoria’s sales contracts that may be enormously expensive.

The Consumer Affairs minister has now stepped in, in an attempt to ensure agents don’t lose out on their lucrative commissions.

The Supreme Court upheld a County Court judgment from last August which ruled that shortened sales contracts, approved by the director of Consumer Affairs Victoria and sold to agents by the Real Estate Institute of Victoria, did not comply with the Estate Agents Act 1980.

The April decision saw a Ray White St Albans agent lose a $385,000 commission on the sale of an $8.8 million Keysborough industrial site.

Two versions of the contract were available for agents to buy from the REIV. The longer version contained the full wording of the “rebate statement” as stated in section 49A of the act, whereas the shorter version did not.

Neither Consumer Affairs Victoria nor the REIV would confirm on Monday why two different forms were available, nor for how long they were available.

REIV chief executive Gil King said the institute had “relied on the short and long forms published by Consumer Affairs Victoria”.

Barrister Chris Twidale said he understood most agents opted to use the shortened version of the contract, and that it was possible this “defective” version had been used by agents for years.

He said vendors who had sold properties using the shorter contract could be able to claim back any commission paid to their agent – usually anywhere between two and three per cent on residential property sales.

“The act is very clear as to the consequences: full return of the commission back to the vendor,” Mr Twidale said. “You’re looking at a considerable sum of money.”

Mr Twidale had acted on behalf of both agents and vendors affected by the ruling, and said he would advise vendors to look back over their contracts and seek legal advice.

“For mum and dad investors, this case has very wide-ranging implications,” Mr Twidale said. “It could be years worth of contracts with the majority of agents using the short form.”

A spokesman for consumer affairs minister Marlene Kairouz on Monday said the government was working with the REIV “to ensure estate agents who have followed their regulatory responsibilities in good faith and have legitimately performed work, are paid for that work”.

The REIV amended the rebate statement in its contracts after the County Court decision, and Mr King said all members were informed.

“At this stage, the extent of the issue is not clear. The REIV is working with the Victorian government to ensure this matter is resolved,” he said.

A Consumer Affairs Victoria spokesman said agents were made aware of the outcome of the case and were reminded to include all requirements of section 49A in their sales contracts.

He said the County Court decision “affirmed the responsibilities of agents to comply with all requirements of section 49A of the Estate Agents Act 1980 in order to claim commission in respect of a property sale”.

jemimah.clegg@domain.com.au