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How to avoid the death trap of double commission claims
It makes sense to give one agency the sole mandate to sell and market your property. Not only does it allow you to work with the agent of your choice, but it should also provide protection against claims for commission by other agents. Where you give more than one agency the mandate to sell your property, it is possible that potential buyers may have viewed the property with more than one agency, without you knowing it.
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"By way of example, a person views a property at a show house, shows no interest in the property and then, weeks or even months later, purchases the property through another agency, after the sole mandate had lapsed," explains Karien Hunter, Founder and Director at AMC Hunter Inc.
It is also quite common for sole mandates to include a clause which stipulates that the agency would be entitled to their commission in circumstances where the property was sold to anyone who had viewed the property during the existence of the sole mandate period, after the mandate period.
"We suggest sellers apply these rules in order to avoid any potential claims for double commission, and to facilitate the sale. Firstly, make sure you only grant a sole mandate to an agency in your area which has a good reputation and good track record in terms of concluded sales. Ask the agent for a marketing plan and hold them to it," Hunter explains.
She continues, "Make sure the mandate correctly reflects what was discussed with the agent before your sign; insert a clause to the effect that the agency shall furnish you with a list of names of people who had viewed the property through their agency during the mandate period, upon expiry of the mandate period, and lastly, when you are presented with any offers by other agents, it will be easy to check if such person(s) had viewed the property previously with this agency. When you are presented with an offer, make sure the sale agreement contains a clause whereby the purchaser warrants that they had not viewed the property through any other agency and where they indemnify you against any claim by another agency".
A sole mandate is a privilege, not a right
Hunter goes on to explain that a sole mandate is a privilege and not a right - sellers must ensure that they grant such mandate on terms that are acceptable to them, to agents who will act on such mandate.
A mandate is a 'fixed terms contract' in terms of the Consumer Protection Act, 68 of 2008, and if all else fails, can be terminated by giving 20 business days written notice - regardless of the duration of the mandate agreement. If a buyer viewed the property whilst the mandate was still in place, the seller may still be faced with a potential claim for commission.
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