Must I pay estate agent’s commission if there is no agreement?

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BUSINESS NEWS - When buying or selling a property, estate agents play a crucial role in facilitating the process. But what happens when there is no explicit agreement regarding the estate agent's commission?

The general rule is that an estate agent's commission is only payable if there is a valid agreement in place in the form of a written contract (usually the agent’s mandate), or a verbal understanding.

However, if an agent can prove that their actions and the client's behaviour implied an agreement, commission may still be payable.

In the recent case of Golden Rewards 120 CC t/a Remax Marine v M3 Holdings (Pty) Ltd the issue of whether commission payable in the absence of an express agreement was in front of the court.

Having reviewed the facts, the court found that there was an implied consensus on what was due to the agent for the services rendered. There had also been attempts by the parties to agree on some form of remuneration and as there was no evidence presented to rebut the presumption of commission being payable, the court found it permissible to allow a reasonable remuneration at the usual rate of commission.

The court accordingly found that the estate agent was entitled to commission despite the absence of an express agreement regarding commission or the amount of commission.

This case however highlights the importance for both client and estate agent to avoid disputes by agreeing in a written mandate to the scope of the estate agent’s duties and remuneration structure before services are provided.

Are you a seller or estate agent with questions about a mandate or commission? Contact Jaco Lötter for a free consultation.

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