A huge part, perhaps even the most important part, of an agent’s business is their commission! And, this article is all about commission, and more specifically, whether you can, as an agent, negotiate your rate of commission after the property is sold…
At GSR law, we love it when our agents bring us interesting legal questions and most recently we had a question from an agent about whether they could legally only negotiate their commission after the Sale of the Property.
The Application of the Consumer Protection Act (“CPA”)
The Consumer Protection Act governs an agent’s mandate with the Seller of a property. It protects all those who are defined as consumers under the Act.
A consumer is either a natural person (e.g., someone with a birth certificate) or a small juristic person (e.g., a company whose assets and turnover are under R2 million).
Commission and Mandatory Disclosure:
As soon as the CPA kicks in and either your Seller or your Purchaser are consumers under the Act, then the rate of commission that you will be making on the property needs to be disclosed up front.
This is because commission is one of the mandatory disclosures under the CPA. S 27 of the CPA gives the Minister the ability to determine what information is mandatory for an intermediary, which includes an estate agent, to disclose and under Regulation 9 this includes the commission an agent will make.
Please note that an agent thus has the duty to disclose this information to the seller timeously and in writing. An agent will even be required to disclose the commission they will make to the Purchaser upon request.
In short, all of this means that an agent must negotiate the commission up front and have it written down on the mandate before the sale.
If you have any more questions about securing your commission, feel free to contact us at [email protected]