MANDATES IN LEASE AGREEMENTS

TO ALL ESTEEMED BUSINESS PARTNERS

Number

04/2017

Introduction

The question begging an answer is whether a lease agreement may contain a clause which provides for a sole mandate to procure a buyer for the property so leased, should the landlord at any time during the duration of the lease or on termination of the lease, wish to put the property on the market for sale.

Sole Mandate

The Estate Agents Code of Conduct prohibits the inclusion of a sole mandate in a lease agreement. Estate agents are thus warned to distance themselves from such conduct as it could land them in hot water with the EAAB should they try and enforce such a sole mandate, and they could even lose their license to trade.

Open Mandate

The Code of Conduct does not, however, prohibit the inclusion of a clause which provides for an ordinary open mandate. This clause being a stipulatio alteri (a benefit on behalf of a third party) needs to be accepted by the agent who would wish to benefit from such stipulation or clause.

Purchase by Tenant

The inclusion of a clause in a lease agreement which provides that where the tenant introduced by the agent buys the property during the period of lease, or within a specified period of time of termination thereof, such agent will be entitled to commission from the lessor, is binding. This once again being a stipulatio alteri that needs the acceptance by the agent or agency in whose favour it is imposed.

Applicability of Consumer Protection Act (CPA)

It is trite law that the CPA regulates the relationship between landlords and agents. It is thus strongly advised that where a lease agreement contains a clause providing for an open mandate, or a benefit to agent commission should the property be sold to the tenant that such provision is pertinently brought to the attention of the lessor.

For any queries please contact our property law division at the details below:

Allen West
Tel: 012 425 3549
awest@macrobert.co.za

Daleen Loubser
Tel: 012 425 3489
dloubser@macrobert.co.za

Disclaimer: This newsflash is for general information only and should not be used as legal or professional advice. No liability can be accepted for any errors or omissions, nor for any loss or damage arising from reliance and any information therein