A Property24 reader asks:

 

If an estate agent brings a purchaser to a property open mandate and takes the seller an offer which is turned down immediately by the seller for two reasons: (a) price too low and (b) subject to buyer having to sell a property.

Three months later, that particular purchaser responded to the seller advertising the same property privately and a sale of the house resulted and the price originally offered, for example R2.8 million gross, was for the nett figure the seller was advertising.

Would the estate agent still be entitled to claim commission even though this purchaser has now been through the property privately?

Marlon Shevelew, specialist rental/eviction/sectional title attorney and general litigation attorney at Cape-based legal firm  Marlon Shevelew and Associates responds:

The present case is going to turn closely on the facts of this matter. In short, these principles can be derived from case-law:

- An estate agent must be the “effective cause” of the sale in order to be entitled to commission.
- A distinction is not made between open and sole mandates.
- Generally, although not always, the agent who first introduces a buyer to a property would be the “effective cause” of the sale.
- Where a “sufficiently weighty intervening cause” occurs after the agent’s introduction of the buyer to the property, the “effective cause” of the agent is extinguished.
- The question is whether the agent’s exertions caused the buyer to purchase the property or whether it was rather due to the impact of the intervening cause.
- Case-law indicates that the question is whether the sale would probably have eventuated without the intervention of a third party.

As the facts of this matter are not entirely clear, no firm conclusion can be reached on this particular case on whether any "intervening cause" existed which made the seller the "effective cause" of the sale.

General principles

An estate agent given a mandate to find a buyer for a property is entitled to payment of commission only if it can be established on a balance of probabilities that the estate agent had performed the mandate and that its efforts in finding the buyer were the effective cause of the sale that materialised (Gordon v Slotar 1973 3 SA 765 (A); Wacks v Record 1955 2 SA 234 (C); and Van Zyl en Seuns (Edms) Bpk v Nel 1975 3 SA 983 (N)).

To put this differently, at common law an estate agent is not entitled to payment of commission unless it can be established, among other things, that the agent's efforts were the “decisive factor” that triggered the sale (Barnard & Parry Ltd v Strydom 1946 AD 931) or were “overridingly important” (Aida Real Estate v Lipschitz 1971 3 SA 871 (W); and Basil Elk Estates (Pty) Ltd v Curzon 1990 2 SA 1 (T)), despite the input of the seller and/or that of any other estate agent mandated by the seller.

Whether an estate agent is the effective cause of a transaction is a question of fact, involving the application of common sense standards (Webranchek v LJ Jacobs & Co Ltd 1948 4 SA 671 (A)).

Accordingly, whether the estate agent in the present case is entitled to commission will turn strongly on the particular facts of this case.

Readers' Comments Have a comment about this article?   Email us now.

In my opinion, taking the information into consideration, the Agent was instrumental in introducing the client to the property, the offer was not accepted, but the Purchaser still pursued the property until succeeding in obtaining it, through whatever cause.  This indicates that the Agent was instrumental in introducing the Purchaser to the Property and should be able to claim commission. - Gail

Reading through Marlon’s response to the question, I hope the user who asked the question is a law expert, but in that case he wouldn’t have asked the question. Marlon’s response does not provide a layman, which I presume the user would be, with a layman’s answer even if the answer was simply to state that it depends on the merits of the case. Personally I’m more confused after reading the response than I was after reading the user’s question.- Mailula

I do believe that in the mandate there is a clause that allows the agent. To claim commission after the mandate has expired. However after receiving the mandate and before you sign it get a lawyer to. Go over the mandate. In my case,this was done and now the clause has been taken out which entitles. The agent to commission after the mandate has expired. Hope this info helps others. - Keith

I guess only a lawyer would be able to understand this article. - Dhiresh

Thank you so much for a very informative article.  I have a similar question that I think many readers might wonder about:If a buyer sees that a particular property is on sale through noticing the estate agent board on the property or seeing it being advertised online via a website like private properly or property24 (by the estate agent, but not through their own website).  The buyer then approach the seller directly by for example knocking on the door and introducing himself or looking up the owner online etc.  If a sale is then negotiated directly with the owner (without ever involving the estate agent) - does that give the estate agent the right to commission and does sole mandate or lack thereof influence such commission? - Carlo

Something similar happened to me.What i did was give the agent 25% of the com as he did introduce me to the buyer.And he was happy with that. - Douglas