No estate agent has an automatic right to be paid commission on having sold a property. His right to commission is founded on contract.
The agent is given a mandate by a seller to find a buyer for his property, or by a buyer, to find a property to purchase, and the party granting a mandate agrees to pay the agent a commission against his successful completion of a mandate. As they are the most commonly encountered, we will deal with seller’s mandates in this article.
Classes of Mandates
There are a number of ways in which a mandate may be given to an agent by a seller.
The seller’s property is for sale, and the agent learns of this. He contacts the seller, introduces himself as an agent, and requests permission to show a prospective buyer the seller’s property. Should the seller agree, a mandate has been granted even though no specific request or authority to sell has been granted.
Oral and Open
The mandate need not be in writing to be valid, and so an oral request for permission to sell the seller’s property does constitute a mandate, but never a sole mandate.
The Estate Agency Affairs Board, a Statutory Body, which regulates the Estate Agency Profession, has declared that any attempt to secure a sole mandate, granting an agent the sole right to sell a Property, must contain the following distinct characteristics :-
It must be in writing; it must contain a clear commencement date and a clear termination date; the authority of the person granting the mandate must be clear, and the property to be sold must be suitably identified. The mandate may have no automatic extension as an open mandate on expiry, and any continuing open mandate of the sole mandate expiry must be renegotiated. Further, the agent must state the minimum marketing strategies he will employ in attempting to sell the property. This sole mandate normally endures up to the termination date, but the seller may cancel if its clear that the agent has not performed as promised. The sole mandate must state clearly the commission to be paid, when the commission will be earned and when it will be paid, and the consequences to the seller if he breaches the sole mandate.
Irrespective of whichever mandate an agents holds, however, he is not entitled to sue for the recovery of commission unless he is in possession of a Fidelity Fund Certificate, issued by the Estate Agency Affairs valid for the period when the property was sold and the commission earned.