Take care now to prevent double commission claims
Homeowners need to take special care now not to expose themselves to the possibility of having to pay double commission on property sales.
This warning comes from Barry Davies, CEO of Chas Everitt Franchising, who notes that the incidence of sellers ending up in court to defend double commission claims is increasing.
"And with the property market tightening, sellers are especially at risk since they may throw caution to the winds in their effort to secure a sale," he says.
Claims for double commission most usually arise when sellers award multiple
mandates in an effort to broaden the exposure of their property to the market.
But, cautions Davies, this also widens the scope for confusion as to which agent
was the "effective cause" of the sale, and thus for more than
one agency to claim it is entitled to the commission.
"And the agent who actually concludes the sale is not always deemed to
be the effective cause of the transaction. In a case where the property has
been introduced to a potential buyer by one agent and then sold to the same
buyer by another agent, the first agent might well be seen by the courts as
the effective cause and thus entitled to sales commission - even if commission
has already been paid to the second agent," he notes.
Consumers can, however, protect themselves in more than one way. The most obvious
- and safest - is to award a sole mandate to a reputable agency that has the
backing of a large national group. This step not only protects sellers against
double commission claims but at the same time assures them
of wide exposure through the group's referral networks.
Sellers can also obtain indemnity against double commission claims from agents, but this will only be valid if the agent who was the "effective cause" of the sale grants it. "Several court cases have shown that indemnity given to the home seller by a second agent is worthless," Davies notes.
In cases where sellers decide to award more than one mandate, the best course of action, he says, is to insist on a clause in the sales mandate that provides for commission to be shared in any instances where more than one claim arises.
Issued by Chas Everitt International
For further information call Brenda Smith at
Chas Everitt International Bryanston on 011 463 2033
or visit www.chaseveritt.com