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Monday Sep 09, 2013

Property seller in breach may be liable for commission

A seller can be held liable for the estate agent's commission if the sale falls through because he or she failed to meet the conditions in the offer to purchase or because the seller cancelled the sale.

A Cape Town-based estate agent, who asked not to be named, tells of a seller who reneged on an agreement and could have been held liable to pay commission for being in breach.

'The seller approached me to sell her house, for which she wanted R1.9 million. She gave me a mandate, and I proceeded to market her property.

'I had a couple of very eager buyers and managed to get her an offer for R2.2 million. She accepted the offer, and the buyer secured finance. At that point, the seller decided she no longer wanted to sell. She told me her friends said she was 'crazy to sell' and so she wasn't going to go through with it.

'I know I could have claimed commission from her, but I also know that it might cost me more in the long run, knowing the person she is and the influence she wields in the area. So, I let her go.'

The deed of sale that the seller signed stated: 'Agent's commission is earned and payable on transfer of the property into the name of the purchaser, or upon cancellation of the agreement for any reason whatsoever, including any mutual cancellation.'

James Phillipson, a conveyancer and director at law firm STBB Smith Tabata Buchanan Boyes, says the right to commission in agreements of sale is a contractual right. Usually, commission is earned once the agreement has been signed by both parties and the suspensive conditions have been fulfilled, but is payable on registration of transfer or cancellation of the agreement.

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