My family was selling an inherited property, and suddenly brokers of all kinds jumped at us—each thinking they were entitled to a share of the sale as if they were co-owners—simply for saying hello, giving a phone number, or showing up without any prior arrangement with the buyer.
Being someone who respects rules and order, I researched and wrote the following to share with readers—whether sellers or buyers—so that society can avoid disputes:
Who is the “Broker” (Mediator)?
A broker is a person or entity that acts as an intermediary between the seller and buyer to facilitate the completion of a sale or purchase, in exchange for a fee or commission.
In some sectors, the term “simsār” (middleman) is used, but in a professional context—especially in real estate, securities, or business—the terms mediator or broker are preferred.
Rules of Dealing Between Broker, Seller, and Buyer
1. Prior agreement is essential
No party—whether the broker or anyone else—has the right to demand fees or commission unless there is a prior, written agreement on the nature of the role and the payment.
It is always advisable to document this agreement in writing to protect all rights.
2. Actual mediation requires a real role
To be considered a legitimate broker entitled to commission, a person must:
- Play an active role in negotiations or in serious connection between the parties.
- Be the direct cause of the deal’s completion.
- Present the property, item, or project clearly and specifically.
- Be transparent with information.
Can fees be claimed without a prior agreement?
No.
Legally and ethically, no one may claim payment or commission without a clear prior agreement.
Without such an agreement, any claim is invalid.
Does merely attending a meeting between seller and buyer count as mediation worthy of commission?
No.
Simply attending or introducing the two parties—without a real role in negotiations, facilitating the deal, or persuading—does not count as mediation that warrants payment.
Likewise, someone who merely invites both parties to meet, without a direct contribution to closing the deal, has no legal right to a share of the sale.
Does giving the buyer the seller’s phone number count as mediation?
No.
Providing a phone number or enabling simple contact—without approval or authorization from both parties—does not count as mediation and gives no financial rights.
What does a professional broker do?
A professional broker:
- Works under a clear agreement.
- Represents one or both parties based on authorization.
- Provides accurate information and manages negotiations honestly.
- Gets paid a specific fee based on the deal’s outcome—often a pre-agreed percentage (e.g., around 1% of the sale value in real estate).
- Complies with local laws (e.g., brokerage or real estate regulations).
Summary
Not everyone who connects two people is a broker.
Not every broker is entitled to payment without an agreement.
Mediation is a profession with rules, not just chance encounters or casual conversations.
Overview of Egyptian Law Governing Commercial and Real Estate Brokerage
Law No. 120 of 1982 (as amended)
1. General Scope
Law No. 120 of 1982 is known as The Law Regulating Commercial Agency and Certain Brokerage Activities.
It requires commercial agents, commercial brokers, and real estate brokers to be registered in special registers at the Ministry of Trade and Industry.
2. Who is considered a “real estate broker”?
Anyone registered in the designated registry who engages in work related to real estate and land—buying, selling, leasing, or mediating.
3. Requirements for practicing brokerage
- Official registration in the ministry’s registry (Real Estate Brokers Register).
- Possession of a commercial and tax registration, with regular transaction reporting.
- No listing on terrorism lists, use of non-cash payments, and keeping detailed records.
4. Procedural and Contract Requirements
- Contracts must be written and signed, containing the broker’s details (name, registration number, property information, payment terms…).
- Every deal must be recorded in a certified ledger—digital or paper—with full details for each transaction, and signed by the broker.
5. Commission
- Typical commission: ~1% of the sale value (or half a month’s rent for leases), split between parties if they agree.
- Commission is only due if the mediation directly results in a signed contract, and it must be documented in a broker’s agreement.
6. Penalties
- Practicing brokerage without a license/registration can result in imprisonment of up to two years and fines from EGP 50,000 to EGP 1,000,000, with possible business closure and a two-year ban on licensing.
- The profession is monitored by the Ministry of Trade and Industry, including possible administrative or disciplinary suspension.
7. Recent Amendments – Law No. 21 of 2022
- Amended Law 120/1982 to tighten oversight, create an electronic registry for real estate brokers, and prohibit unregistered practice, with the above penalties.
- Expanded regulations to cover commercial agencies and brokerage in general.
- Aimed to combat fraud and money laundering, improve transparency, and promote electronic payments.
Legal Conclusion: Who is considered—and treated—as a broker?
Essential conditions:
- Official registration and licensing
- Written contract proving the mediation
- Actual role leading to the sale
- Maintained transaction records
- Commission paid only after contract completion
- Legal authorization to operate
Without meeting these conditions, no one may claim to be a broker or demand payment, nor can they hold any official status as one.
