9 Mar 2011
In the last decade there have been regular attempts by sellers of property to cut down on or avoid paying commission - but if and when these reach the courts the arguments for the cancellation of commission have almost always been rejected and the courts have almost invariably decided in the agent's favour.
The most recent High Court case on this subject should send out a warning to sellers who try to ignore the fact that if an agent was even partially the ?effective cause' of the sale, the courts will rule in favour of his being paid a commission. In the case referred to (Temoso Trading cc vs Agenbacht & Others) the purchaser renegotiated certain aspects of the sale and was granted the extensions. As these changes were brought about without the help of the agent the seller then argued that he was no longer obliged to pay the commission. The background to the dispute was that the original agreement was subject to the buyer obtaining mortgage finance of R6 million within 90 days and being given consent in principle to the development of a township on the property before 1st June 2006. The sale agreement stipulated that the commission would be paid subject to these conditions being met. By January 2006, it became apparent that consent for the township would not be obtained within the time stipulated and the parties to the deal then agreed to the extensions and amendments referred to, with the other sale conditions remaining unchanged. In April 2006 a new agreement along these lines was signed by the buyer in which, among other things, the amount of the mortgage bond was altered. However, it was stipulated that the agent's commission would remain intact. Then, when transfer finally came about, the seller suddenly decided that he was not obliged to pay the commission, his argument being that the town planning approval had not been obtained by the date stipulated and that the agent had played no part in drawing up the second agreement. Faced with these claims, however, the court ruled in favour of the agent and said that the seller had to pay the commission. The judge pointed out that this had, in fact, been stipulated in the second agreement and it could not be disputed that the agent had brought the buyer and seller together and was, therefore, in legal terminology an effective cause of the sale. Agents from time-to-time do encounter strong independent minded clients (who often have been highly successful in other fields) who like to take over and to control the property deal, often altering and changing clauses in the process. It is almost always tactful to work with strong minded clients as far as one can - unless it becomes clear that they are about to make a mistake. This compliance and willingness to play a subsidiary listening role should, however, never be allowed to obscure the fact the agent has played his part, has probably achieved far more than he is given credit for and is entitled to his commission. *Anton du Plessis is the CEO of Vineyard Estates