Estate Agents Entitled to Commission?

In order for the Estate Agent to be entitled to commission, he must firstly be mandated by the seller by way of;

• An open mandate,providing a mandate to multiple estate agencies, or
• A sole mandate,which provides a mandate to a specific estate agency, or
• Adual mandate, where two estate agencies are provided with a mandate to sell the seller's property.

Secondly, The estate agent mustbe the 'effective cause' of the sale andisconsidered as such if he introduced a willing and financially able buyer to the seller

Lastly, a binding contract must beconcluded between the parties.

The three requirements listed directly above must also comply with section 26(a) and (b) of the Estate Agency Affairs Act 112 of 1976. This section states that no person shall perform any act as an estate agent unless a valid Fidelity Fund Certificate has been issued to him and that he has, in respect of every person who is in his employment, taken out fidelity insurance to an amount which in the opinion of the board is sufficient.

Where two or more estate agents choose to take the purchaser to court if a dispute regarding commission would arise,the court would have to consider whether on the probabilities of the case the plaintiff is telling the truth in that, he or she is the effective cause of the sale. If that is accomplished the court does not need to make other considerations

,Thismeans that, there does not need to be a specific action with regards to "introducing" a purchaser to the seller on the part of the agent(s), the conclusion of the sale of the property, can be argued to be as a result of the estate agents "For Sale" signs that were outside the premises of the seller. Therefore, the existence of the "For Sale" signs outside the property of the seller can be said to be the cause of the sale taking place, thus leaving the estate agent(s) entitled to a commission as a result of such a sale.

This causation effectively means that the court will in every case assess the degree to which the estate agent(s) helped bring about a sale. To prove this point, the case ofWakefields Real Estate (Pty) Ltd v Attree 2011 (6) SA 557 (SCA) wherethe seller igave a sole mandate to one firm of estate agents, and then phoned other agents to tell them about the property. One of those other agents brought someone to see the property, who then made an offer through that agent, which the seller accepted. The question in this matter then became, which of the various agents had been the "effective cause"? The High Court decided that Wakefields, who had made the initial introduction of the eventual purchaser, had not been the effective cause of the sale.

However this decision was overturned by The Supreme Court of Appeal referring to the case of Webranchek v L K Jacobs & Co Ltd 1948 (4) SA 671 (A) where it was stated that,

"Situations are conceivable in which it is impossible to distinguish between the efforts
of one agent and another in terms of causality or degrees of causation."

Wakefields was thus found to have been the effective cause of the sale, despite the significant role played by other agents, and were entitled to the sales commission. The seller who had already paid commissionto another agent, found himself having to pay commission again to Wakefields plus the costs of the litigation.

Therefore, where an estate agent(s) is given a mandate to sell property, the agent must comply with the above mentionedrequirements and comply with s26 of the Estate Agency Affairs Act 112 of 1976.