SELLERS, WATCH OUT! DOUBLE COMMISSION DANGER If you are selling a property, you need to be aware that you will have to pay commission to any agent who is the "effective cause" of a sale, even if you have terminated that agent's mandate before the actual sale takes place. Worse, if you brought in a second agent to replace the first, you risk having to pay double commission! In awarding commission recently to an agent whose mandate had been terminated, the Court commented: "an unempowered agent may still be the effective cause of a sale and thus entitled to commission. The inquiry in such a case is normally whether despite the termination or non-existence of a prior mandate the work done by the unempowered agent was sufficiently significant to merit the award of commission even though not constituting the immediate or proximate cause of the ultimate transaction." That's a wide definition, and every case will be decided on its particular facts. Briefly, the facts here were that the agent had, before the expiry of a sole mandate in her favour, made the initial introduction of the eventual purchaser to the property. The sale itself however was only concluded some 7 months later, long after the mandate had lapsed, and after relations between the seller and the agent had soured and become hostile. The parties concluded the sale themselves, and only after they had negotiated directly with each other for some time. There's also a lot at stake. In this case, the seller is down R560.000, plus interest and costs - which, however fair it is to the agent, doubtless wreaks havoc on the seller's cash flow projections! Tread carefully, and take advice in doubt. Agents on the other hand should take legal action to recover disputed commission without delay - the agent in this case risked losing to a defence that the claim had prescribed. Recent Articles for January 2010; Source: www.dotnews.co.za |
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