Real Estate Agency Agreement (Pakistan)

A Real Estate Agency Agreement in Pakistan sets out the basis on which the supplier provides services to the client, defining deliverables, payment, intellectual property and liability.

The Contract Act 1872 governs the law of agency in Pakistan thoroughly. Section 182 defines an agent as a person employed to do any act for another or to represent another in dealings with third persons — the property owner is the principal and the estate agent is the agent. Section 184 of the Contract Act 1872 provides that any person of the age of majority and sound mind may act as an agent, with no professional licence requirement imposed by the Contract Act itself — meaning that real estate agency in Pakistan has historically operated without mandatory professional licensing, unlike jurisdictions such as the United Kingdom (Estate Agents Act 1979) or Singapore (Estate Agents Act 2010).

However, certain Pakistani provinces and cities have introduced regulatory frameworks for real estate agents. The Punjab Real Estate (Regulation and Development) Act 2015 (amended 2020) established the Punjab Real Estate Regulatory Authority (RERA Punjab) and introduced mandatory registration requirements for property developers and agents operating in Punjab — real estate agents must now register with RERA Punjab and comply with its code of conduct and disclosure requirements. The Sindh Real Estate Regulatory Authority (Sindh RERA) was established under the Sindh Real Estate (Regulation and Development) Act 2020. Islamabad's Capital Development Authority (CDA) maintains a separate registration system for property dealers operating in the Federal Capital Territory (ICT). These regulatory frameworks are progressively formalising an industry that was previously entirely unregulated.

The Federal Board of Revenue (FBR) has introduced withholding tax provisions specifically targeting real estate transactions. Under Section 236C of the Income Tax Ordinance 2001, the seller of immovable property must withhold advance tax at the prescribed rate from the consideration paid — and the estate agent facilitating the transaction is increasingly required to confirm tax compliance documentation is in order before the transaction is finalised. Estate agents who arrange transactions exceeding PKR 5 million must now file information returns with FBR under the property information reporting requirements introduced in the Finance Act 2022.

The dalali (commission) payable to the estate agent in Pakistan traditionally ranges from 0.5% to 2% of the transaction value, paid by the buyer, seller, or both parties (split commission) depending on local market custom. In Karachi's DHA and Clifton areas, commissions of 1% on each side are standard; in Lahore's Gulberg and Model Town, 1% to 1.5% of the transaction value is typical; in Islamabad's residential sectors, commissions of 0.5% to 1% are common. The Real Estate Agency Agreement must specify the commission rate clearly to avoid post-transaction disputes — verbal commission agreements are frequently the source of litigation before Civil Courts and Small Claims Courts across Pakistan.

A formal Real Estate Agency Agreement in Pakistan also addresses the distinction between an exclusive agency appointment (where only the appointed agent may earn commission on any transaction completed during the agency period) and a non-exclusive or open listing (where the property owner may appoint multiple agents and pays commission only to the agent who procures the successful buyer or tenant). Most Pakistani property owners prefer non-exclusive arrangements for maximum market exposure, while professional agents strongly prefer exclusive listings for assured return on their marketing investment.

A Real Estate Agency Agreement in Pakistan is required whenever a property owner, buyer, developer, or landlord formally appoints a real estate agent to act on their behalf in property transactions and wishes to document the terms of that appointment to prevent commission disputes and define the agent's authority.

A Real Estate Agency Agreement is needed when a residential property owner in Lahore, Karachi, Islamabad, Rawalpindi, or any other Pakistani city wishes to sell or rent their home and appoints an estate agent to market the property, arrange viewings, negotiate offers, and support the transaction. Without a written agreement, the agent's commission entitlement, the duration of the exclusive listing period, and the agent's authority to accept offers on the owner's behalf are all uncertain — leading to disputes after the transaction is concluded.

A Real Estate Agency Agreement is required when a real estate developer — such as a housing scheme registered with RERA Punjab or Sindh RERA — appoints an external sales agent to market and sell residential plots, apartments, or commercial units in a new development. Under the Punjab Real Estate (Regulation and Development) Act 2015, developers must confirm that agents marketing their projects are RERA-registered and are operating under documented agency agreements.

A Real Estate Agency Agreement is needed when a company or individual seeking to lease commercial premises — office space, retail outlets, warehouses, or industrial units — appoints a commercial property agent to identify suitable properties, negotiate lease terms, and support execution of the commercial lease agreement under the Transfer of Property Act 1882.

A Real Estate Agency Agreement is required when a non-resident Pakistani (NRP) living abroad appoints a trusted property agent in Pakistan to manage the sale or rental of their Pakistan-based property. The agreement must clearly define the agent's authority, including whether the agent is authorised to execute documents on the NRP's behalf as a special attorney — if so, a separate General Power of Attorney under the Power of Attorney Act 1882 may also be required.

A Real Estate Agency Agreement is needed when a property buyer appoints a buyer's agent to search for suitable properties, conduct due diligence on title documents, negotiate purchase prices, and coordinate the conveyancing process. Buyer's agents are less common in Pakistan than seller's agents but are increasingly used by returning overseas Pakistanis and institutional property investors who need local professional representation.

A Real Estate Agency Agreement is required when a landlord appoints a property management agent to handle the day-to-day management of a rental property — collecting rent, dealing with tenants, arranging maintenance, and renewing tenancy agreements. The property management agreement defines the management fee (typically 5% to 10% of monthly rent), the agent's authority to incur maintenance expenditure without prior approval up to a specified limit, and the reporting requirements to the landlord.

A valid Real Estate Agency Agreement in Pakistan under the Contract Act 1872 and applicable provincial property regulations must contain the following essential elements to be enforceable and to clearly define the rights and obligations of the property owner and the estate agent.

Party Identification: Full legal names, CNIC numbers issued by NADRA, addresses, and contact details of the principal (property owner or buyer) and the agent (estate agent / arth / property dealer). Where the agent is a registered company or partnership, its SECP registration number or partnership registration number and National Tax Number (NTN) issued by FBR must be stated. The agent's RERA registration number (if operating in Punjab or Sindh) should be included to demonstrate regulatory compliance under the Punjab Real Estate (Regulation and Development) Act 2015 or Sindh RERA Act 2020.

Property Description: A precise description of the property that is the subject of the agency appointment — the full address, the property type (residential plot, house, apartment, commercial unit, agricultural land), the plot size in Marla, Kanal, or square yards (as measured by the relevant development authority — LDA in Lahore, DHA, KDA in Karachi, CDA in Islamabad), the registered owner's name as per the Patwari's record (Jamabandi), and the Khasra number or Property Number from the revenue record.

Scope of Authority: A clear statement of the actions the agent is authorised to take — marketing the property, arranging viewings, soliciting offers, negotiating price, and introducing potential buyers or tenants. The agreement must also specify what the agent is NOT authorised to do without specific written instruction — for example, accepting deposits on the principal's behalf, executing agreements to sell, or reducing the asking price below a specified minimum.

Commission (Dalali): The agreed commission rate (as a percentage of the transaction price or as a fixed PKR amount), when commission becomes payable (upon introduction of a buyer, upon exchange of agreement to sell, or upon registration of the conveyance deed), who is responsible for payment (buyer, seller, landlord, or tenant), and whether the commission is subject to withholding tax under Section 233 of the Income Tax Ordinance 2001 (applicable to commission agents).

Duration and Exclusivity: The period of the agency appointment — typically 3 to 6 months — and whether the appointment is exclusive (only this agent may earn commission on any transaction during the period) or non-exclusive (open listing where multiple agents may be appointed simultaneously). An exclusive agency clause should specify whether the principal must pay commission even if the property is sold directly by the principal without the agent's involvement during the exclusive period.

Marketing Activities: The marketing activities the agent is obligated to undertake — listing on property portals (Zameen.com, OLX, Lamudi), erecting a for-sale board, newspaper advertising, social media marketing — and the costs the principal will reimburse beyond the commission.

Termination: The conditions under which either party may terminate the agency — typically by written notice of 7 to 30 days — and what happens to introduced buyers or tenants if termination occurs before the transaction completes (tail commission provisions protecting the agent for a defined period after termination).

Dispute Resolution: The governing law (Contract Act 1872, provincial property laws) and the forum for dispute resolution — typically Civil Court of the relevant district or arbitration under the Arbitration Act 1940 or the Arbitration Act 2024 (where in force). RERA Punjab and Sindh RERA provide administrative dispute resolution mechanisms for registered agents.

Forms-legal.com provides this Real Estate Agency Agreement (Pakistan) template as a practical tool for property owners, buyers, and estate agents. All parties should verify agent registration with RERA Punjab or Sindh RERA (where applicable) and confirm that the underlying property transaction documentation complies with the Transfer of Property Act 1882, the Stamp Act 1899, and the Registration Act 1908.