Double commission claims

The publicity given recently to the danger (for the seller of a property) of finding himself having to pay double commissions is timeous and much needed, says Anton du Plessis, CEO of Vineyard Estates.

“At least two recent court cases,” he said, “have shown that the seller can all too easily find himself having to pay two commissions although he had no prior warning that this might happen.”

When (as often happens today) a property has been on the market a long time, said du Plessis, the seller is often talked into granting another company or agent a sole mandate.

At this point, says du Plessis, the newly appointed agent should make it clear to the seller, if possible in writing, that he could be liable for a double commission if the person to whom the sale is eventually made was introduced to the property by the originally mandated agent.

“In these circumstances,” said du Plessis, “the seller might quote the legal maxim claiming that the second agent was the “effective cause” of the sale. However, recent court cases have shown that being the “effective cause” can in fact be attributed to more than one agent, making both able to claim full commission. The seller should check carefully the wording of the previous and the new mandate. It often says in a mandate that commission is due should a buyer introduced to the property buy at a later date. This would entitle that mandate holder to commission. But what happens if the property is mandated at the same time to an agent whose mandate says that commission is due should a sale occur within the period of the mandate? In this case, both entities would have a good claim for commission.”

“Ethically,” said du Plessis, “I would not feel justified in receiving commission where the sale originated before the start of my mandate, and would be loathe to put my seller in the unpleasant position of facing a double commission claim but other agents might react differently.

“The lesson to be learned here,” he said, “is that if you decide to award a second sole mandate on the expiry of the original, caution is needed. Your deed of sale must stipulate that the buyer was introduced to the property only by the agent bringing the offer, and that no other party was the effective cause of the sale. If this then proves false, the seller would have a claim against the buyer.”

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Article by: www.vineyardestates.co.za