SOUTHERN SUBURBS BOUTIQUE PROPERTY COMPANY | Tel: +27 21 762 4444
AN AGENT CAN WORK A FULLYEAR ON SELLING A PROPERTY – AND STILL BE PAID NOTHING WHEN IT IS SOLD
Anton du Plessis, Chief Executive of Vineyard Estates, recently found himself in a situation where, after for working for a full year to sell a residential property (i.e. long after his sole mandate on the property had expired), it was eventually sold by the owner to a member of his own family. However, “being essentially a very decent type” (du Plessis’s words), the seller nevertheless agreed to pay du Plessis his full commission.
“This sort of generosity is found fairly rarely in property marketing,” said du Plessis. “The plain truth is that once his mandate has expired, the agent can be out in the cold, especially if he has not introduced the buyer to the seller.”
In this particular case, he said, his team had held show houses at the home over 40 times in the year that it had been on the market. He had also spent huge sums on advertising the property – and had taken dozens of potential buyers to see it.
“All this effort would have counted for nothing in most cases,” said du Plessis, “even though it may well have publicised the property magnificently.”
Spelling out the agent’s rights in this sort of predicament, du Plessis said that, as the law now stands, the agent can only claim commission if it can be shown that in some way he was an “effective cause”’ of the sale. If the agent’s mandate has expired he is in a very weak position legally, even if (which can very seldom be proved) the buyer has been influenced by the agent’s advertising if not by direct contact with him.
If the agent is operating without an up-to-date Fidelity Fund Certificate from the Estate Agency Affairs Board, added du Plessis, he has absolutely no legal right to claim a commission and this can be denied by the seller – even if previously he has given the agent a sole mandate.
Occasionally, said du Plessis, an agent will mention to a buyer that, although it is not on his list, the type of home he is looking for appears to be available at another agency. He may then approach the seller or his agent with a request to bring the client to him. In this situation, said du Plessis, the non-mandated agent still has no right to a commission if a sale ensues unless the commission has been agreed upon prior to that happening. Often, he says, an agent will introduce a potential buyer to another agent, assuming that the agent will share the commission 50/50 as is the norm. The introducing agent should carefully clarify in writing what split of commission he expects should a sale be concluded
“The position here is tricky,” said du Plessis, “because it is in fact illegal to offer a buyer a home for which the agent has no mandate. So, according to the Estate Agency Affairs Act, an agent may not show a buyer a house – even from the road – and offer to sell it to them if he has not first received permission to do so by the seller. This permission is referred to as a mandate and is perfectly binding on the seller, and may be verbal. A sole mandate on the other hand must be in writing to be of any effect. It is acceptable, however, for a non-mandated agent to offer to introduce a client to another agent or the seller.”
Despite several court cases involving the “effective cause”clause, argument as to how widely it applies still continues, said du Plessis.
“In a Durban High Court case recently a seller was forced to pay a double commission due to two agents being partly the effective cause of the sale. It is, therefore, a non-mandated agent’s duty to clarify at the outset that commission will be paid, and at what percentage. The same applies to the seller. He should establish at the very outset what commission the agent is expecting to be paid. Failure to do so can lead to a dispute when a willing and able buyer is introduced.