A Double Commission Claim? Yes Sellers, Beware!
In a recent judgment handed down by the Supreme Court of Appeal, the sellers of a property found themselves liable for estate agent's commission even though they had paid commission to another estate agent after they had sold their house in 2005.
Mr and Mrs Attree ("the sellers") sold their property at 37 Monteith Place, Durban North to the Third Party, Mrs Howard ("the purchaser") through the agency of Pam Golding Properties after the purchaser had been introduced to the property by Wakefields Real Estate. The sellers paid commission to Pam Golding Properties.
Wakefields Real Estate contended that they were the effective cause of the sale and sued for their commission.
On Appeal, the court Held as follows:
It is notoriously difficult, when there are competing estate agents, to determine who is the effective cause of the sale that eventuates. It may be that more than one agent is entitled to commission.
But for Mrs Walker's (Wakefields) introduction of the house to the purchaser, the purchaser would not have been aware of the existence of the property.
That it was Mrs Walker's 'wisdom and business acumen' that made her take the purchaser to 37 Monteith Place. Mrs Walker gave up trying to negotiate a sale when the purchaser told her that they had decided not to buy but were going to renovate their existing home and invest in their business.
If the purchaser had approached the sellers and persuaded them to sell their property to them at a lower price (that it, assuming there was no intervention by De Marigny (Pam Golding Properties)), Wakefields would have been entitled to their commission. The same would apply had the sellers approached the purchaser directly and offered to sell their property to them at a lower price. Wakefields were therefore the effective cause of the sale.
De Marigny from Pam Golding had learned that the purchaser was interested in 37 Monteith Place quite fortuitously. She did nothing about it until the seller phoned and advised that he had reduced the selling price. The effort that De Marigny put in amounted to no more that making a phone call to the purchaser, arranging for them to view the property again, drawing up an offer to purchase, persuading the sellers to lower their price even further and accepting a reduced commission.
The court found that De Marigny was undoubtedly instrumental in concluding the sale, but was not the effective cause thereof.
Had Walker not shown the purchaser the house initially, De Marigny would not have known that the purchaser was interested in the property and "loved it". De Marigny had reaped where she had not sown. Despite De Marigny's later intervention, Wakefields introduction was held to be the effective cause of the sale.
Accordingly, Wakefields were held to be entitled to their commission. The court noted that the fact that the sellers found themselves liable to pay more than one estate agency, was of their own making.
The best way for a seller to protect himself from a situation such as this is to appoint a sole agent to market his property.