In the case of City and Atlantic Real Estate CC t/a RE/MAX Living v Smith and Others, the Western Cape High Court reaffirmed an important principle, that an estate agent can still earn commission even if a sale is concluded after their mandate has expired, provided they introduced the purchaser to the property during the mandate period.
At the heart of the dispute was a residential property in Cape Town. RE/MAX had a mandate to sell the property, which mandate was valid from 1 September 2021 to 30 April 2022. During the mandate period, RE/MAX introduced a prospective buyer, Mr Pears, to the property and conducted several viewings. However, negotiations between the sellers and Mr Pears broke down, and the property was later sold to him through another agent, after the RE/MAX mandate had already lapsed.
RE/MAX approached the court, claiming entitlement to the commission on the basis that they were the effective cause of the sale. Although the other agent, Kapstadt Properties, argued that the commission was not payable because the sale took place after RE/MAX’s mandate had expired, the court held that what matters is not the timing of the sale, but whether the agent’s efforts directly led to the conclusion of the eventual sale.
Importantly, the court found that the introduction of Mr Pears by RE/MAX during the valid mandate period played a crucial role in securing the eventual sale. As such, RE/MAX was the effective cause of the sale, and the seller was ordered to pay commission to RE/MAX, despite the sale being finalised months after their mandate expired.
This judgment confirms a long-standing principle in South African property law where an agent introduces a purchaser to a property during a valid mandate, and that introduction leads to a sale, the agent is entitled to commission regardless of when the sale is completed or which agent finalises it.
In conclusion, the case serves as a reminder of the enduring legal principle that commission is not simply tied to timing or finalisation of a sale, but rather to the substance and cause of the sale.
This article was prepared by Dudu Kelokilwe and Wildu du Plessis.