This time round,
the buyer puts in an offer to purchase with Agent B and the sale goes through
without a hitch. So, who was the effective cause of the sale and importantly,
who can claim the commission?
2 steps to
being the effective cause of a sale
For Agent A to successfully
claim that they were the effective cause of the sale - even if they didn’t
complete the final sale documents - they would need to show that both of these
requirements had been met:
1) They
introduced the eventual purchaser to the property
2) Their
efforts caused the sale to occur
Does Agent A
have a claim?
What is
particularly important is that Agent A’s claim is not against Agent
B, but rather against the seller of the property.
Agent B is
entitled to claim their commission from the seller but the onus is on the
seller to insulate themselves from conflict between competing agents who may be
showing the property to the same prospective buyer.
Can the seller
be forced to pay double commission?
Instances such
as this may necessitate the seller paying a double commission in the form of
one commission to Agent B for facilitating the sale and a further commission to
Agent A for being the effective cause of the sale if they were able to satisfy
the requirements.
The seller can
avoid paying a double commission by making sure that a good mandate is firmly
in place, preferably one that is exclusive!
What if the
buyer specifically wants to exclude Agent A?
We recently
dealt with a case where Agent A wished to claim effective cause of the sale of
a property - what set this matter apart from others is that the prospective
buyer had realised that they knew Agent A and had a previous negative history
with that Agent. The prospective buyer viewed the property with Agent B and
then bought the property through that Agent.
Agent A
attempted to claim effective cause but the argument fell flat as the purchaser
stated outright that they would not buy the property if Agent A was involved,
so Agent A had not met the requirement of their efforts being the cause of the
sale.
Always obtain
an exclusive mandate!
The simplest
and easiest way to avoid unwanted commission disputes is to obtain an exclusive
(sole) mandate to sell the property. An exclusive mandate will protect both the
agent and the seller from unwanted disputes from other agencies.
If you need to
download the TPN Sole and Exclusive Mandate, visit the TPN
Shop.
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