Avoid the trap of Double Commissions
It makes sense to give one agency the sole mandate to sell and market your property.
A sole mandate is an agreement whereby the agency undertakes to actively market and sell a property, to the exclusion of other agencies, for a certain period of time. According to the rules of the Estate Agency Affairs Board, the agency must also provide the seller with a marketing plan.
Sadly, some estate agencies regard their written sole mandates as a guaranteed cheque for payment of commission – even in circumstances where they had done very little or nothing to promote or sell a property.
It is quite common for sole mandates to include a clause which stipulates that the agency would be entitled to their commission in circumstances where the property is sold to anyone who had viewed the property during the existence of their sole mandate. This often gives rise to double claims for commission which means that a seller has to pay commission to the agency that had actually sold the property, plus face a claim for commission from the agency whose mandate had already expired.
By way of example, a person views a property at a show house, shows no interest in the property and then, weeks or even months later, purchases the property through another agency, after the sole mandate had lapsed.
We suggest sellers apply these rules in order to avoid any potential claims for double commission:
- Make sure you only grant a sole mandate to an agency in your area which has a good reputation;
- Carefully read every clause and make sure the mandate correctly reflects what was discussed with the agent;
- Insert a clause to the effect that the agency shall furnish you with a list of names of people who had viewed the property through them during the mandate period when the mandate expires;
- Insert a clause that allows you to summarily terminate the mandate in the event that the agency has failed to perform and/or render the services in accordance with their marketing plan;
- When you sell the property, make sure the sale agreement contains a clause whereby the purchaser warrants that they had not viewed the property through any other agency and indemnifies you against any claim to the contrary;
- Ask your attorney to peruse the mandate before you sign it;
- A sole mandate is a privilege and not a right – sellers must ensure that they grant such mandate on terms that are acceptable to them.
