Abortive Fees: How Agents Can Protect Their Interests When Deals Collapse
Safeguarding Your Effort When Buyers or Sellers Default
Every agent has been there. You’ve worked tirelessly — sourced the listing, qualified the buyer, negotiated the offer, prepared documents, liaised with lawyers — and then, just when everything seems ready to close, the deal falls apart.
The buyer backs out.
The seller changes their mind.
Sometimes, both vanish.
In most cases, the agent — who did everything right — ends up with nothing.
That’s why every professional agency should adopt Abortive Fee clauses — a simple, lawful, and fair safeguard that ensures agents are paid for their work, even when a deal doesn’t complete.
1. What Is an Abortive Fee?
An Abortive Fee is a pre-agreed compensation payable to the agent if the transaction is aborted due to no fault of the agent.
It’s not a penalty — it’s recognition of the professional work already completed:
- qualifying buyers or tenants,
- conducting viewings,
- securing offer letters,
- managing negotiations, and
- coordinating with stakeholders.
Abortive Fees acknowledge that even if the sale or tenancy fails, the agent’s service has already been delivered.
2. Where Should Abortive Fees Be Stated?
Abortive Fees carry weight only if they are written and acknowledged upfront. There are two standard documents where they should appear:
(a) The Appointment Letter
Between the agency and the client (seller/landlord). This is the best place to define service scope, commission entitlement, and abortive compensation. It ensures that if the seller/landlord withdraws after accepting an offer, or sells through another agent, your agency is entitled to compensation.
Sample Clause:
“In the event of withdrawal or non-performance by the Vendor/Landlord after acceptance of a bona fide offer, the Agent shall be entitled to an Abortive Fee equivalent to [X]% of the agreed commission, payable from any forfeited deposit or compensation received.”
(b) The Offer Letter
Between buyer/tenant and seller/landlord, usually prepared by the agent. This clause protects the agent when either party defaults after signing the offer, SPA, or tenancy agreement.
Sample Clause:
“In the event of default, withdrawal, or non-performance by either party, the Agent shall be entitled to an Abortive Fee, payable from any forfeited deposit or damages recovered.”
Including this clause ensures clear consent from both parties — reducing future disputes.
3. When Abortive Fees Apply
Abortive Fees should only apply when the deal fails due to one party’s fault, not because of the agent’s negligence. Common scenarios include:
(a) Buyer/Tenant Withdrawal After Offer Acceptance
- Offer Letter signed by both parties
- Buyer/Tenant changes mind, fails to pay deposit, or ignores deadline → Abortive Fee applies, drawn from the forfeited booking deposit.
(b) Seller/Landlord Backing Out After Acceptance
- Seller accepts buyer’s offer, then rejects or delays without cause
- Owner sells or rents to another party after commitment → Abortive Fee applies, funded by damages or forfeited deposit.
(c) Post-SPA or Tenancy Default
- SPA or Tenancy Agreement signed
- One party later defaults — e.g. buyer fails financing, tenant refuses move-in → Abortive Fee applies, from compensation awarded or forfeited deposits.
In essence: if the agent’s work was complete, and the deal aborted due to client default, the Abortive Fee is justified.
4. Where Does the Money Come From?
Abortive Fees are not an additional charge paid out-of-pocket. They are typically deducted from existing deposits or compensation recovered when a default happens.
Three common sources:
- Forfeited booking deposit — held by the agency as stakeholder, released to the agent as per the signed clause.
- Owner-held deposit — forfeited due to buyer/tenant default.
- Legal compensation (specific performance or settlement) — when one party sues and wins damages, part is allocated to the agent.
This ensures fairness — the agent is compensated only when loss is recognized by forfeiture or judgment.
5. Why Abortive Fees Are Fair (and Professional)
Abortive Fees are not punitive. They’re compensatory. They protect the professional who already delivered the service but lost due to another party’s default.
Without it:
- Agents work entirely at risk.
- Effort is unrewarded.
- Disputes turn emotional instead of contractual.
With it:
- Everyone knows the rules from the start.
- Clients think twice before walking away.
- Agents are protected, fairly and transparently.
It’s a hallmark of lawful, professional agency practice — just like consultation fees for lawyers and doctors.
6. Practical Steps for Agents
To ensure your Abortive Fees are enforceable:
- Include it in your Appointment Letter with the seller/landlord
- Include it in your Offer Letter between parties
- Get acknowledgment signatures — don’t rely on verbal agreements
- Record your work — messages, viewing logs, offer drafts, negotiations
- Hold deposits properly — in a client account or as stakeholder, per BOVAEP rules
Professional documentation is your protection. Without it, even a justified claim becomes an uphill battle.
7. How ListingMine ERP Helps
ListingMine ERP makes this simple:
- Attach Abortive Fee clauses automatically to Offer Letters
- Track deal progress and parties involved
- Record default reasons and timestamps
- Generate Abortive Fee invoices seamlessly
- Maintain full compliance with BOVAEP stakeholder requirements
It’s not just about getting paid — it’s about documenting value professionally.
Final Takeaway
Deals fall through. That’s reality. But your effort doesn’t have to vanish with them.
All professional agents should enforce Abortive Fees. They’re lawful, fair, and essential — not just to protect your time, but your professionalism.
Always insert them in your Appointment Letter and Offer Letter. And when the deposit is forfeited or damages recovered, your Abortive Fee is lawfully due.
Because in real estate, hard work deserves protection — not regret.
Use ListingMine ERP to enforce your clauses, protect your commissions, and run a more professional practice.
