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Property sales: Sellers, beware of double commission

When selling a property, be aware of the dangers of paying double commission: to an estate agent involved in the final negotiation and effectively causing the sale of the property to the purchaser, but also to another agent who had first introduced the purchaser to the property.

The Supreme Court of Appeal had to deal with this scenario in the case of Wakefields Real Estate v Attree (666/10) [2012] ZASCA 160.

The facts

In 2004 an estate agency, Wakefields, approached the Attrees and offered to find a purchaser for their property, having become aware that the Attrees were building another house. At that stage the Attrees was not sure whether they wanted to sell their property, but nevertheless informed agents that they could bring potential purchasers to view their property. Wakefields listed the house and advertised it at the price of R3 775 000.00, although the Attrees had indicated that they wanted R3 995 000.00. Wakefields took prospective purchasers to the property, but never encountered the Attrees on these visits.

At a show day, Walker, an agent of Wakefields, had encountered the Howards and took them to view the Attrees property. The Howards informed Walker that they ‘loved’ the property, but that they were unable to make an offer at that time, because the price was too high and that they had other financial commitments.

Shortly afterwards, the Howards fortuitously encountered another estate agent De Marigny, employed by Pam Golding Properties. De Marigny learned that the Howards were interested in the Attrees property or other property in that same area. De Marigny then successfully negotiated a sale of the property to the Howards, after the Attrees had reduced the purchase price by R500 000.00 and the Howards’ other financial commitments had fallen away. The Attrees paid De Marigny/Pam Golding the agreed commission, but when Walker also claimed commission, they refused to pay.

The Attrees argued that Wakefields had no mandate, but Wakefields pleaded that there was an oral mandate, the implied terms of which included one that the Attrees pay estate agents’ commission equivalent to the tariff amount plus VAT. The amount payable, if that term were proved, was agreed by all concerned to be 6 percent of the purchase price.

The outcome

The Supreme Court of Appeal found that, had it not been for Walker’s introduction of the house to the Howards, the latter would not have been aware of the existence of the property. It was Walker’s “wisdom and business acumen” that made her take the Howards to the Attrees property.

The Court found that if the Howards had later approached the Attrees, and persuaded them to sell their property, Wakefields would undoubtedly have been entitled to commission. Also, had the Attrees approached the Howards directly and offered to sell to them at a lower price, Wakefields would likewise have been entitled to commission. Had Walker not shown the Howards the house first, the property would not have been sold to the Howards through the agency of De Marigny/Pam Golding. But for the introduction by Walker, De Marigny would not have known that the Howards were interested in the property. De Marigny reaped where she had not sown. Therefore, the Court found that Walker was indeed the effective cause of the sale.

Accordingly, Wakefields were entitled to commission at 6 percent of the purchase price. The fact that the Attrees found themselves liable to pay more than one agent was of their own making. The Court referred to the earlier case of Webranchek v LK Jacobs & Co Ltd 1948 (4) SA 671 (A), where Van den Heever JA said that a seller has “only himself to blame for his predicament, for he should protect himself against that risk”.

It appears therefore that situations are conceivable where a seller may owe commission to more than one agent – not a happy situation for a seller!