He Said, She Said

The most common causes of Estate Agent commission disputes and how to avoid them.

September 26, 2016

Estate Agent commission, a fee that is due to the agent in exchange for the successful brokerage of a property sale, can be the cause of many disagreements if not clearly dealt with in the mandate or handled appropriately.

As part of a typical property sale, the seller is responsible for paying the Estate Agent commission which is calculated as a percentage of the sale price; this is the fee for finding a willing buyer and is due and payable to the Estate Agent once the offer to purchase has been signed by both the buyer and seller.

As with many elements in the property transfer process, there are potential pitfalls, and knowing what these are in advance can help prevent them becoming problematic later on.

For example, should there be more than one Estate Agent appointed to market the property, there is the potential for disagreements to arise when there are multiple offers received through different agents. Most importantly, once an unconditional offer to purchase has been accepted by the seller the commission becomes due to the agent that effectively caused the sale to be concluded. If a seller subsequently accepts another (possibly more lucrative) unconditional offer, the seller may be liable for commission on both the offer that results in the property transfer, as well as the offer initially accepted but subsequently cancelled.

Another situation which can result in complications is when the contract of sale is cancelled due to a breach by one of the parties. Although in the typical scenario, the seller is liable for the Estate Agent commission, in this case, it is the person who is in breach of the contract who will be held liable for commission.

It is always best to preempt such situations. To avoid confusion and potential disagreements, both buyers and sellers should pay close attention to the terms contained in the offer to purchase. In addition, the seller should be made aware upfront by the Estate Agent of what to expect through the sale process, particularly when working with multiple Estate Agents.

Should a dispute occur, however, litigation should be considered a last resort, as it can be a lengthy and costly process. Instead, it is always best to attempt to resolve this between the parties concerned, and where necessary with the facilitation of the relevant conveyancing attorneys.

Written by Wessel de Kock

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