How to Handle Agency Fees After Terminating a Rental Contract

What if the house purchase falls through? Should the agent refund the fee? Generally, the answer is yes, though agents are typically reluctant to return the money willingly. In such cases, the buyer may need to take legal action. Buyers should carefully weigh whether the cost and effort of litigation are worth it.

Strictly speaking under the law, a real estate commission in China is earned when the contract is finalized and signed. Therefore, if the contract is later terminated, the failure isn’t necessarily the agent’s fault, and they may still be entitled to their fee. However, courts have developed their own practical approach to interpreting and applying the law. When disputes arise between agents and consumers, judges tend to side with the consumer, supporting a refund. Conversely, if an agent tries to collect a fee from a buyer after failing to receive it, the courts generally don’t support that either.

As professionals, agents are expected to have a solid understanding of relevant policies and laws. If the transaction fails due to an agent’s misconduct—such as making false promises or forging documents—the agent must not only refund the fee but may also be liable for damages suffered by both the buyer and the seller.
This doesn’t mean buying a home through litigation is always the right move, because:
• There is no uniform standard across local courts regarding whether agency fees should be refunded, so there remains a risk of losing the money.
• Even winning in court doesn't guarantee you'll actually collect the funds.
It's generally advisable to work with a reputable agency. At the very least, if you win a lawsuit, you're more likely to recover your money.