Cancellation of a Sale Mandate

03 June 2024 ,  André Styger 532

A Sales Mandate with a Property Practitioner (Estate Agent) to sell your house is in essence an agreement (contract) in which you as the Seller undertake to pay an amount of money (commission) to the Estate Agent when the contract’s terms (the mandate) are fulfilled, i.e. when the property is successfully sold, or when a purchaser is secured by the Estate Agent (and is willing and able to buy), or other terms and conditions agreed to between yourself and the Estate Agent which will “trigger” your obligation to pay the commission.

Although a mandate is a contract and the normal rules / laws regarding a contract applies, certain specific laws and regulations must also be taken into account. For example:

  1. Estate Agents are “suppliers” (of a professional service) as defined in the Consumer Protection Act (CPA) which implies that in certain circumstances the CPA may be applicable to your mandate;
  2. All Estate Agents have to adhere to the Property Practitioners Act No.22 of 2019 (the Act);
  3. A Code of Conduct has been promulgated in terms of the Act which Estate Agents must follow and which is enforced by the Property Partitioner Regulatory Authority (PPRA: https://theppra.org.za )

Different types of mandates:

A sole mandate gives a single agent or agency the exclusive rights to sell your property.  No other agencies can sell the property, without working with the agency appointed in the mandate.

An open mandate, is a mandate given to multiple agents/agencies to market the property to prospective buyers.

Some mandates are “shared” by several companies working together on the said agreement.  These agencies usually work together to find a buyer, and the agreements between them should not affect the seller.

In summary your mandate is a contract which you can honour, cancel or breach, each with its own consequences.

BEWARE: Mandates contain is a clause that states that all persons that were introduced to the property by the Estate Agent will trigger commission payable to the agency should it be sold to that person.

 The Estate Agent’s Conduct Rule (34.3.1.10.1) stipulates that an agent must explain the legal implications to you should you during the currency of a sole mandate (or thereafter) sell the property with or without the assistance of an Estate Agent.

For example, Agent A brings buyer X to your property during his mandate period.  The mandate then lapses or is cancelled by you, and afterwards you proceed in selling the property to the same buyer X. Agent A will probably be able to successfully claim commission from you as the Seller, as he introduced the buyer to the property.

You might even end up paying double commission whereas your second (new) Estate Agent might also be entitled to commission in certain circumstances.  

(Please note, that there is no simple answer for these matters and the courts will interpret the law and latest court cases in every new case before them.)

QUESTION: How then should I cancel a mandate?

As stated a mandate is nothing more than a contract and one has to look carefully at the terms and conditions of such contract.   Notwithstanding, the CPA allows for two possible ‘outs’:

  1. All “direct marketing” agreements (mandates) are subject to the 5-day cooling-off period. What is “direct marketing”? If an Estate Agent approaches you without you soliciting for his services ("cold call") and persuades you to give him / her a mandate, you can cancel that mandate within 5 days for no reason at all.
  2. Outside the above cooling off period, if you decide that the mandate isn’t working for you, the CPA stipulates that you must give 20 working days written notice to cancel it. This will only apply if you are defined as a “consumer” in terms of the act and should you obtain advice especially if you are representing a company, trust, etc.

QUESTION: Ho do I move my mandate to another Estate Agency?

First of all, make sure you cancel your existing mandate in the correct manner, or wait for it to lapse (run its full course). Only then should you give a new mandate to your new Estate Agent.

Then as set out above you should refrain from selling your property via the new Estate Agent to a buyer that was introduced to you by your previous Estate Agent, because most mandates have the following clause (or something similar to it):

“I, the Seller hereby undertake:

  • ·not to sell or let the property either personally, or through any other agent during the period of this exclusive authority;
  • ·not to sell the property within ninety (90) days of the expiry hereof to any person introduced to the property, or to me, whether by you, or any other person during the period of this mandate;
  • to accept any offer submitted to me substantially in accordance herewith.”

It is imperative to READ YOUR MANDATE before you sign it, but also before you cancel.  The mandate usually expressly excludes any persons introduced to the property during the initial mandate period.  It is therefore extremely important that you as the seller keep track of which prospective buyers view your property with which agency.  Buyers does not always inform the agents that they have seen the property with someone else before, and this may lead to a possible double commission claim later on.

In this regard your new Estate Agent is also bound by Conduct Rule 34.6.3.1 which prohibits him / her to introduce a prospective purchaser to any immovable property or to you, if he knows, or has reason to believe, that such person has already been introduced to your property or to you by another estate agent and that there is a likelihood that you may have to pay commission to more than one estate agent.

We often come across Sellers receiving advise that they can’t immediately sign a new mandate on their property with a new Estate Agent and must first wait for a period of 6 months, a so-called “cool down” period.

This is incorrect and sometimes malicious advice and if such advice is given by a property practitioner he / she will be in breach of the PPRA’s Conduct Rules.

QUESTION: What should you keep in mind before you sign a mandate:

  • Don’t leave any open spaces. Ensure that all the dates are completed before you sign, and that there is a beginning date and an end date to your mandate.
  • Make sure you obtain a copy of your mandate as soon as you have signed it.
  • Ensure that the agency you pick is a registered property practitioner (Estate agency) by checking their status on the PPRA website (https://theppra.org.za).
  • READ the mandate and be sure that you understand what the terms and conditions are, as well as the manner in which you will be able to cancel it.

 

 

 

 

 

 

Share: