ESTATE AGENTS COMMISSION

In terms of the law of contract, an agent is entitled to payment of his/her commission as soon as his/her mandate has been discharged. The situation differs slightly with estate agents, but not drastically. The Estate Agency Affairs Act 112 of 1976 ("the Act") determines that all estate agents must be registered with the Estate Agency Affairs Board ("EAAB"). Upon successful registration with the EAAB, such estate agent will be issued with a fidelity fund certificate. Only then, will the estate agent have any entitlement to commission. Failing to register as such, is subject to criminal sanctions.

Our courts have confirmed that an estate agent must have a valid fidelity fund certificate as required by the Act in order to be eligible for commission. Having such a certificate offers the client the peace of mind of knowing that the estate agent is qualified, renders his/her service in the best interest of the public and has the necessary safety measures with regard to insurance and security.

An estate agent's commission is earned when he/she was the effective cause of the sale, a valid and binding contract is entered into by the seller and purchaser and all suspensive conditions contained in that contract have been met. Neither the Act nor the EAAB's code of conduct prescribes a fixed or specific amount of commission. One can thus negotiate with the estate agent his/her commission, provided that said commission is determined or determinable in the mandate. Although a mandate may determine otherwise, an estate agent's commission is normally only paid once ownership of the property has been transferred to the purchaser.

Readers are referred to the recent case of Wakefields Real Estate (Pty) Ltd v Aftree 2011 (6) SA 557 (SCA) which should be a caution to all where more than one agent is afforded a mandate to sell.