When one hears the term “double agent”, it usually conjures up scenes from a James Bond
movie or spy novel. Double agents (or property practitioners as they are referred to in the
Property Practitioners Act) (the Act) are, however, sometimes a reality in the world of sales
of immovable property.
An agent is prohibited in terms of the Act from accepting a mandate to sell a property unless
a fully completed and signed mandatory disclosure form has been completed by a
prospective seller. The Act does not, however, obligate an agent to have a written and
signed mandate before commencing with the marketing of a property, and the absence of a
signed mandate agreement between the prospective seller and the agent can sometimes
lead to uncertainty with regard to a number of material issues, including, who is entitled to
commission when there is more than one agent involved or there has been a substantial
lapse of time between an initial introduction of a purchaser to a property and the conclusion
of a sale agreement.
Mandate agreements are often but not always sole mandates. Even if there is a written
document governing the relationship between the parties, there are instances where two
agents claim full commission from the seller of a property, or a dispute arises as to whether
an agent is entitled to payment of commission at all.
Disputes between sellers and agents are unfortunately not uncommon and often result in
litigation. In some cases new causes intervene and the original introduction of a purchaser to
a property is not what in fact ultimately results in the purchase of the property. In such
circumstances our courts have ruled that the seller is not legally liable for payment of
commission to the original agent. In the absence of any clear agreement to the contrary, our
courts have generally held that once it has been established that an agent was the “effective
cause” of a sale, notwithstanding that the sale may have only been finalised long after the
agent’s active efforts came to an end, the agent would be entitled to payment of commission.
Sellers and agents alike are well-advised to clearly record all aspects of their relationship
with regard to the prospective sale of a property and to keep clear records of parties that
have been introduced by such agent to the seller. Failure to do so can, and often does,
result in “double agents” having relevance outside of the world of espionage.
Steven Fisher
