07 Commission Article

Claim for Commission

Requirements to claim for commission

If you wish to claim commission, you must allege and prove the following in order to proceed with a claim for commission:

  • 1. That you have complied with the provisions of Section 26 of the Estate Agency Affairs Act, 1976 (as amended by Estate Agency Affairs Amendment Act, 1998) relating to the required fidelity fund certificate and fidelity insurance;
  • 2. A mandate to find a purchaser or seller that has been completed and signed;
  • 3. Due performance of the mandate. What constitutes due performance depends on the terms of the mandate.  In the absence of special terms, it involves the following:
  • a. An introduction by the agent of a purchaser to the seller;
  • b. Establishing that the purchaser was willing and able to purchase the property at the time that the contract (Offer to Purchase) was signed;
  • c. Establishing that a valid contract of sale (Offer to Purchase) was concluded;
  • d. Establishing that the introduction was the effective cause of the contract (Offer to Purchase);
  • e. The commission payable. Depends on the terms of the mandate.

4. The contract (Offer to Purchase) has been cancelled by either party due to a breach of contract.

Section 26 of the Estate Agency Affairs Act, 1976
(as amended by the Estate Agents Amendment Act, 1998)

section 26 reads as follows:

26. Prohibition of rendering of services as an estate agent in certain circumstances
1.) No person shall perform any act as an estate agent unless a valid fidelity fund certificate has been issued to him or her and to every person employed by him or her as an estate agent and, if such person is –
a. A company, to every director or that company; or
b. A close corporation, to every member referred to in paragraph (b) of the definition of “estate agent” of that corporation.”

Instituting a claim against a seller or purchaser

Have a look at the signed Offer to Purchase which should include the following clauses:

  • Should the Offer to Purchase be cancelled as a result of breach of the seller, then the seller acknowledges that he or she remains liable for payment of the full professional fee;
  • Should the Offer to Purchase be cancelled as a result of breach of the purchaser, then the purchaser acknowledges the he or she remains liable for payment of the full professional fee;
  • Should the Offer to Purchase be cancelled by agreement between the seller and purchaser, then the seller and purchaser acknowledge that they are jointly and severally liable for payment of the full professional fee.

NB! It’s vital that the Professional Fee Agreement / Commission Clause is signed by both the seller and purchaser. If they sign it, they then agree to bind themselves to it. 

Process for claimimg commission

  • 1. As soon as there has been a breach of the Offer to Purchase, kindly ensure that the conveyancing / transferring attorney handling the transfer place the party (seller / purchaser) on terms.
  • 2. After the expiry date of the letter mentioned above and the defaulting party failed to comply, which leads to the deal being cancelled, send all the necessary documents in order to assess whether you will have a strong or weak case to institute a claim for commission.
  • 3. Once we have established that you have a potentially strong case to proceed with your claim, we will draft a letter demanding payment of the commission amount from the specific party (either the seller or purchaser).
  • 4. The letter of demand will make provision for the party to pay the commission within 7 (seven) business days, failing which a summons will be issued.
  • 5. After the period has expired, we will be able to proceed to issue summons and continue with the litigation process.

Remember that litigation is a time-consuming process and there are no guarantees which route the action will go (defended / undefended), how long it will take until you receive your money and/or whether you will receive the full commission amount.

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