Here’s when sellers could be liable to pay double commission
If you are selling your home with a dual or open mandate you may be liable to pay double agents’ commission once your home is sold.
Although such commission claims are rare, Allen West, property law specialist at MacRobert Attorneys, says there is no rule that the estate agent who first introduced the purchaser to the property is entitled to the commission, as found in the case Webranchek v Jacobs and CO Ltd 1948(4) SA 671(A).
“In instances where an estate agent introduces a prospective purchaser to a seller but the eventual contract is concluded between the seller and the purchaser through a second estate agent, the first agent would be entitled to commission only if it can be proven that it was his efforts which resulted in the contract being concluded,” explains West, adding that the general requirement for the entitlement to commission are: existence of a mandate (sole or open), and performance of the mandate.
Often it is easy to determine which estate agent has a claim to a commission, but this may not always be the case. West explains that where an offer made by a buyer is rejected by the seller because it is too low, the estate agent who handled the offer would not be entitled to claim commission if the property is later sold to the same buyer through the efforts of a second estate agent who managed to raise the selling price because she could find suitable financing for the purchaser.
On the other hand, where a buyer prefers to buy a property in a particular area, but eventually ends up buying in another area, the wisdom and business acumen of the estate agent who originally introduced the buyer to the property in the latter area may constitute the effective cause of the sale even though another agent negotiated the sale.
In situations where it is not so clear cut, it may be that legally the agency principal is liable to pay commission to both estate agents. A principal who lists a property with several estate agents should take the necessary precautions to ensure protection against the risk of paying double commission.
Arnold Maritz, co-principal for Cape Town Southern Suburbs at Lew Geffen Sotheby’s International Realty, says that if your property isn’t sold within the initial sole mandate period with one agency, and you then offer the mandate to another agency, it is your responsibility to ensure that the first agent gives you a list of exclusions: This is a list of serious buyers that were shown the property during the first mandate. If you do not follow this advice you may be responsible for double commission if the new agency sells the home to a buyer who first saw the property with the first agent.
Maritz does, however, add that agents need to be careful not to contravene the Estate Agency Affairs Act or the Code of Conduct. “Although it is legally the seller’s duty to take the necessary precautions to avoid the risk of double commission, the estate agent’s code of conduct states that an agent may not introduce a buyer to a property when such a person has already been introduced to the seller by another agent,” says West, adding that the best way for sellers to protect themselves from possibly paying double commission is to appoint a sole agent to market the property.