Article by AMC Hunter Inc.
In terms of our common law, an estate agent’s mandate is only complete once registration of transfer has taken place, pursuant to a conclusive sale agreement having been concluded.
Most agreements used by estate agencies have changed the common law position, and commission is due and payable upon the successful conclusion of a sale, with all suspensive conditions fulfilled.
However, as the commission is usually paid from the proceeds of a sale, for all practical purposes payment of commission can only effected once, and if, transfer has taken place.
As conveyancers, we are often asked for advice where either of the contracting parties no longer wish to proceed with transfer.
If the agreement does not comply with the provisions of the Alienation of Land Act, there is no agreement and no commission payable.
Common mistakes we come across which nullifies an agreement:
The offer or counter-offer was accepted after the cut-off date for acceptance on the sale agreement.
Even though the agreement was properly signed, there is no agreement as the offer or counter-offer that was made, had lapsed. A new agreement would need to be concluded between the parties.
The acceptance of an offer needs to be communicated to the other contracting party prior to the expiry of the acceptance period.
Unless the agreement stipulates otherwise, the acceptance of an offer (or counter-offer whichever the case might be) needs to be communicated to the other party within the time frame given for acceptance on the contract, otherwise there is no valid agreement.
Changes were made to the sale agreement that have not been initialed. Even though the parties may have been in agreement verbally on all aspects of the contract, it is imperative that all such changes are property initialed by both parties.
If there is any initials missing, there is no agreement.
The agreement has been signed with for example, the seller’s details left out and filled in later by the agent. The validity of a contract must be viewed at the moment of signature by either party – if there were any blank spaces to the agreement that had not been completed at the time of signature, there simply is no agreement. Should any details (eg purchase price, parties names) be completed after the signature of the agreement by either party, the agreement must be initialed where such details have been inserted, and initialed by both parties, prior to the acceptance period stipulated on the contract.
The seller’s marital status is incorrect.
For example, the seller is reflected as the husband only but the parties were married in community of property.
The person signing the offer to purchase is not duly authorized to do so.
When a property is sold or bought by a trust, there has to be a resolution in place, pre-dating the sale agreement, authorising the signatory to sign. It is suggested that agents obtain such resolution prior to the sale agreement being concluded, even at the stage where the property is listed for the first time. It is also important to get a copy of the trust deed and letters of authority to verify who the actual trustees are (this may have been changed over the years) and whether or not the trust authorizes the purchase of a property.
You may not only lose out on hard-earned commission if your agreements do not comply with the law, but your agency (and you) may also face a substantial claim for damages from either buyer or seller who had relied on you and your agency for professional advice and support.