Selling a property? Make sure you understand the estate agent’s mandate:
[an extract from an article by: Anja Bothma in Mail & Guardian – 6 February 2025]
Anyone who has bought or sold a house will know the feeling: if it looks as though an agent has a serious buyer, you don’t want the chance to slip through your fingers. And if there might be awkward issues about who gets the commission, you feel you can work that out later. And then “later” arrives …
A recent case heard by the high court offers valuable insights into understanding, first,
- the implications of a mandate signed with an estate agent and, second,
- how to determine who is entitled to such commission where more than one agency is involved.
This case involved two estate agencies, City and Atlantic Real Estate CC t/a RE/MAX and Kapstadt International Properties CC .
The case heard by the high court and decided just before the December holiday season break, illustrates how easily a problem like this can arise, the difficulties and expense involved in resolving it — and the inevitable disappointment for one of the agents dealing with the sale.
Some extracts from the actual court Case:
- [first purchaser] Pears – made an offer that fell short of the asking price.
His Agents: RE/MAX then informed Pears that the Smiths had accepted an offer made by an American purchaser introduced by Kapstadt. - [second purchaser] introduced by: Kapstadt – the transaction with the American purchaser was abandoned because he could not fulfil the terms of the transaction.
- In about February 2023 the Smiths… [the Sellers] … accepted a second offer from Pears. Alison Smith left a voice message informing the RE/MAX agent that a Kapstadt agent had contacted her to arrange for a client to view the property and that the client was Pears. Alison Smith said she had told the Kapstad agent that Pears had been introduced to the property by RE/MAX.
- RE/MAX said it was the agency that had introduced Pears to the property, and claimed the commission from the Smiths. [Introductory Factor]
- It’s interesting that the Smiths obviously had some concern about who should get the commission, and when they negotiated with Kapstadt, the Smiths insisted on an indemnity from Kapstadt that they, as the sellers, would not be liable for any claim brought by RE/MAX or the commission.
Estate agents also need to take special care and to ensure that they document their efforts in introducing parties to a property because this will be vital in determining the effective cause of the sale at a later stage.
As demonstrated in the judgment, they need to be able to prove that their efforts were the primary factor in effecting the sale and that there was a valid mandate at the time.
The Original, Full Article can be viewed here → Selling a property? Make sure you understand the estate agent’s mandate – The Mail & Guardian
South Africa: Western Cape High Court, Cape Town:
City and Atlantic Real Estate CC t/a Remax Living v Smith and Others (7118/2023) [2024] ZAWCHC 426 (13 December 2024)
Link → https://www.saflii.org/za/cases/ZAWCHC/2024/426.html