Prospective property sellers and buyers are warned to be careful when dealing with several estate agents who are marketing the same property.

Sellers need to be aware of certain risks or they could end up paying double commission, says Gerhard van der Linde, principal of Seeff Pretoria East.

Van der Linde quotes a recent Supreme Court of Appeal ruling that emphasised that buyers and sellers need to be aware that they could be liable for unexpected estate agent commission claims on property sales.

“The court upheld an appeal against a KwaZulu-Natal High Court decision where an estate agency that had introduced a buyer to a home was not entitled to the agent’s commission.”

He explains that an agent from another company had learnt the buyer was interested in the property.

She contacted them when she discovered the seller was willing to reduce the price, the sale was concluded and she was subsequently awarded the sale’s commission.

Although the first agency had no mandate to sell the house, the Supreme Court appeal overturned the decision indicating the agency had taken the buyer and her husband to the property.

If that agent had not introduced them to the property, the couple would not have known the property was on the market. The first agent was thus the effective cause of the sale and entitled to the commission.

The court stated it was notoriously difficult where there were competing agents, to determine who was the effective cause and that it may be that more than one agent was entitled to the commission. Sellers could then find themselves liable to pay commission to two agents.

“A seller appoints an agent usually under a written mandate to find a willing and able purchaser in exchange for an agreed commission,” says Van der Linde.

If there is no mandate and several agents from different companies are involved, the eventual sale agreement could contain a warranty by the purchaser that they had not been initially introduced to the property by another agent thus providing indemnity to the seller should another agent successfully claim commission, he says.

It is absolutely essential that buyers and sellers are aware of this possibility, he points out.

“Always clarify this situation with your agent/s and make sure that you are not unwittingly going to end up paying a double commission.”

He adds that a sole mandate is preferable as it protects all concerned and the mandate can be drawn up for any period of time that the seller feels will be suitable.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

Bridging finance is available to residential and commercial property owners in the following scenarios:

A. Where there is equity in a property and the owner has concluded a valid sale agreement.

B. When the owner has obtained approval for a new or additional bond to be registered over the property.

Usually transferring ownership of a property or registering a new or additional bond can take anywhere between 30-60 days. Generally the owner only obtains access to the surplus funds from the sale or new bond at the end of this period but there are often instances when the owner may need to access funds before this takes place. During this period, Rodel is able to provide the owner with bridging finance before registration of the sale or the new bond.

To facilitate this, the owner enters into a discounting agreement whereby Rodel acquires the equity/surplus for a fixed fee and, in return, immediately pays the owner up to 80% of the value of the equity/surplus. Rodel then obtains an undertaking from the conveyancing attorney that the equity/surplus will be repaid on registration of the transfer or the bond.

Mortgage Plus does not specify how the funds are to be used, but typically they are used for any of the following:

• as a deposit on a new property
• to pay transfer duty on a new property
• to cover the cost of outstanding rates/taxes/levies on the property being sold
• for repayment of personal debt
• to provide working capital funding for businesses

Example:

Sue sells house A for R1 million, she still owes ABSA R500 000 on the property. She puts in an offer to purchase house B for R1,2 million, she can however only obtain a bond for R1 million from FNB. The problem is that Sue does not have the R200 000 cash deposit to secure the purchase of house B.

A possible solution is that Sue can bridge the R200 000 from the proceeds of the sale of house A and use the cash to pay the deposit on the purchase of house B, thus ensuring that the purchase of house B is concluded successfully.

Limitations:

• Can’t be used for 1st time buyers
• Doesn’t apply if the seller sells for less than is owing to the bank, ie there is no equity to bridge.

Agent’s commission advances:

Mortgage Plus through Rodel will advance up to 80% of the commission due to a registered estate agent once all the suspensive conditions of the sale have been met.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za