“Double, Double Toil and Trouble” (Shakespeare)

Particularly in these challenging times, properties are often marketed by multiple estate agents before a successful sale is finally achieved. The resultant risks (for all concerned) are illustrated in a case recently before the Supreme Court of Appeal. The sellers in question have ended up having to pay double commission, and are down some R450.000 plus legal costs – a situation, held the Court, entirely of their own making. The competing commission claims came from –

  1. The agents who were instrumental in concluding the eventual sale. The seller paid them in terms of the sale agreement.
  2. The agent who had originally introduced the buyer to the property, but who had failed to conclude a sale at the time. The seller denied liability, but the Court held that – on the particular facts of this matter – the original agent was still the “effective cause” of the sale, and thus entitled to its full commission.

Every case will be different, and – as the Court noted: “It is notoriously difficult, when there are competing estate agents, to determine who is the effective cause of the sale that eventuates. It may be that more than one agent is entitled to commission.” Protect yourself! Take legal advice before you agree to anything.

  • Sellers: Have agent mandate agreements checked. And insist on a properly-worded warranty (plus indemnity) from the buyer against multiple commission claims.
  • Buyers – if the sale agreement imposes any such warranties and indemnities on you, check that you can safely agree to them.
  • Agents – don’t risk your commission through disputes between the parties and other agents – avoid uncertainty with clear, written client mandates.

Source: LawDotNews – November 2011

Double comission danger! Sellers, Buyers and Agents beware