There is nothing that can sour your house sale or purchase more than a messy legal battle and having to pay a double commission to estate agents. Sadly this could be a reality if you neglect to take certain precautions when selling your property.
A double commission dispute usually arises when a buyer engages with more than one estate agent on the same property, even after significant time has lapsed. One of the agents concludes a sale and the other sues for commission as well.
This sometimes happens when you sell your property on open mandate – listing it with multiple companies at the same time. It’s not uncommon for a buyer to see a property through one agency, and then perhaps a few months later, purchase the same property through another agent. Both agents may have played a role in being either the introduction or the effective cause of the sale.
The seller may be oblivious to this when signing the sale agreement – only to be caught in the middle of a dispute later. If the buyer doesn’t disclose the initial introduction then they too may be liable.
So how can you reduce your risk of this happening? Firstly, don’t sell by open or joint mandate where you will have little knowledge of which buyers view your property through which agent.
Secondly, when you list on sole mandate, insist there is a clause in the sole mandate agreement that limits the validity of a buyer introduction during the mandate. For example, the clause could read that a purchaser who is introduced to the property during the sole mandate would need to purchase the property through the introducing agent for a period of 90 days after the mandate expires.
This limits liability. Without this clause you could well be liable to the introducing agency for 6 months or more. Sadly, a court would decide this – and courts cost money.
Additionally, when your sole mandate expires insist that the agency provides you a list of all the buyers who viewed the property during the mandate. It’s these buyers who would need to purchase through that agency for the limited period (such as 90 days) after the mandate expires. If you are not provided such a list, request it in writing – as this will indicate that you have taken reasonable steps to comply with the mandate.
The bottom line is that, as the seller, you need to stay in control of the process. A sole mandate gives you this protection to a large extent, provided you have the clause referred to above and you follow the process.
If for some reason you receive an offer to purchase from a purchaser who viewed the property through another agent then you are alerted to the fact and can insist the agents resolve any dispute before accepting the offer.
If you are aware of the previous introduction and fail to indemnify yourself, or arrange the agents concerned reach a settlement, you could well be in for a double commission – and that’s something to be avoided at all costs.
Principal, Harcourts Platinum
Director, Harcourts South Africa