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How Secure Is An Agent’s Commission?

How secure is an Agent’s Commission?

Agents spend much time marketing and advertising property, which eventuates in the signing of a sale agreement – only to find that on closer scrutiny, the agreement was not worth the paper it was written on, and many thousands of Rands of hard earned commission flies out the window.

From a perusal of our court rolls it is also evident that property sales can be fraught with problems. Often, what is actually sold, and the terms of the sale are not properly reflected in the agreement of sale which results in a sale agreement either being invalid, or being set aside by the court. Remember, if something is not reflected on the sale agreement, it does not exist.

Common pitfalls are the following:
1. A lack of a proper description of the property sold

In order for an agreement to be valid, it has to be in writing and this means every aspect of the sale must be in writing – and most importantly, the property description, i.e. a description of what is sold. With sectional title, this will include a reference to the Unit number, the name of the complex, and it will set out any Exclusive Use areas allocated to that particular unit.

By way of example, a sectional title property is advertised as having a beautiful swimming pool and garden area, with a lovely view. However, only the unit number is mentioned on the sale agreement and no mention is made of the swimming pool and garden area, which would usually be notarially registered against the title deeds as an Exclusive Use area, with a specific number. For all intents and purposes, the property has been sold, excluding such area. As conveyancers, we can only transfer that which was sold – and this excludes any exclusive areas that were not reflected on the sale agreement. The purchaser would have the perfect excuse to cancel the sale agreement.

2. The unnecessary use of so-called suspensive conditions, or ‘subject to’s’

Most sale agreements contain suspensive conditions, for example, that the sale is subject to the purchaser being able to raise a bond, or subject to the sale of the purchaser’s property which would go towards the purchase of the property bought.

Both these instances are future, uncertain events and the sale should be ‘subject to’ such event(s).

However, agents often misconstrue this and would make a sale ‘subject to’, for example, the seller fixing a roof. In such instance, agents are advised to avoid the use of the words ’subject to’ but to rather make it a term of the agreement to which the seller would have to adhere to within a certain time frame: ’the seller shall attend to the repairs to the roof as set out in the written quotation annexed to the sale agreement, at his own expense, no later than__ (insert date)’.

In such event, should the seller fail to do so timeously, the purchaser can simply place the seller on terms to perform, or sue for the costs of doing the repairs himself, but the agreement will not automatically fall away and become of no force and effect if the repairs were not attended to by a certain date.

3. Failure to properly identify signatories to a sale agreement

Estate agents have to be meticulous when it comes to the signing of agreements – they should not simply assume the marital status of their clients. A Deeds Office check will disclose the marital status of the parties and can be done electronically. If a sale agreement is only signed on behalf of the seller by the one spouse in a marriage in community of property, then there is no sale. Likewise, where a trust purchases or sells a property, all trustees have to sign, or a resolution needs to be in place, authorising one person to sign on behalf of the trust – before the agreement is signed.

4. Failure to initial changes to a sale agreement

Any change to a sale agreement effectively constitutes a counter-offer which needs to be signed by both parties in order for the contract to be valid. So, if the seller has in principle accepted the purchaser’s offer, but added a clause to the sale agreement to the effect that his precious cycads would not form part of the sale and would be removed by him on transfer, then there is no agreement – unless the purchaser has agreed to it and initialled the clause in question.

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