December 2013: Estate Agent Commission and Effective Cause
Both property sellers and estate agents need to know the downside of not recording, clearly and in writing, the exact circumstances in which a seller must pay commission to an agent.
The agent’s claim: R500k
To illustrate – in a case recently before the High Court, an agent claimed to have a verbal mandate from the seller of an industrial property to sell it for R5m. The agent believed that if he found a buyer for R5,5m he would be paid the excess R500,000 as commission. He duly found a buyer at R5,5m but the buyer and seller cut him out - they concluded their own sale agreement at R5m with no provision for commission. The agent duly sued the seller for R500,000 commission.
The agent’s claim: R500k
To illustrate – in a case recently before the High Court, an agent claimed to have a verbal mandate from the seller of an industrial property to sell it for R5m. The agent believed that if he found a buyer for R5,5m he would be paid the excess R500,000 as commission. He duly found a buyer at R5,5m but the buyer and seller cut him out - they concluded their own sale agreement at R5m with no provision for commission. The agent duly sued the seller for R500,000 commission.