Estate agents play a pivotal role in property transactions.  However, disputes regarding the payment of their commission frequently arises, particularly when delays or complications occur between the estate agent’s introduction of a buyer and the ultimate conclusion of a sale. Resolving such disputes often depends on whether the estate agent can prove that he was the “effective cause” of the transaction.

In pursuing a claim, the following must be alleged and proved by an estate agent: 

• Compliance with the provisions of the Property Practitioners Act, 22 of 2019 and more specifically relating to the required Fidelity Fund Certificate and indemnity insurance. An estate agent is not entitled to any remuneration or other payment in respect of or arising from the performance of any act relating to the business of an estate agency unless at the time of the performance of the act a valid Fidelity Fund Certificate had been issued to him.
  
• A mandate to find a purchaser or seller.
  
• Due performance of the mandate.  The terms of the mandate will stipulate what due performance is.   In the absence of special terms, due performance will involve the following:
  1. An introduction by the agent of a purchaser to the seller;
  2. Establishing that the purchaser was, when the contract was signed, willing and able to purchase the property;
  3. Establishing that a valid contract of sale was concluded;
  4. Establishing that the introduction was the effective cause of the contract.   Consideration must be given whether there was a break in the chain of causation.
     
• The commission payable.  This depends on the terms of the mandate.  If nothing was said, the agent may rely on an implied term to the effect that the commission was payable according to the generally accepted tariff – see Muller v Pam Snyman Eiendomskonsultante (Edms) Bpk 2000 4 All SA 412 (C), 2001 1 SA 313 (C). In terms of our common law, an estate agent mandated to find a buyer earns the commission payable in respect of that mandate only if, amongst others, he is the effective cause of the sale concluded between the seller and the purchaser.

This means the estate agent will only be entitled to payment of commission on a sale if his efforts were the “decisive factor”.  In other words, the estates agent’s input must be the primary cause of the transaction.    

Given the complexities of commission disputes, legal action against a party may be a calculated risk. Estate Agents must carefully document their involvement in transactions and maintain records of communication with buyers and sellers. 

Contact our office for assistance and advice regarding your estate commission claims.