Estate Agency Mandates Explained

What is a Property Practitioner?

A Property Practitioner is anyone who deals with property and related matters in their ordinary course of business falls under the definition of “Property Practitioner” as contained in the Property Practitioners Act. Therefore, an estate agent would be a Property Practitioner.

What is An Estate Agent?

An estate agent or real estate agent is a certified professional that helps property sellers and buyers throughout property transactions and manage rental properties on behalf of landlords.

In order for a real estate agent to legally work in South Africa, they need to have a valid Fidelity Fund Certificate that is issued on a yearly basis by the Estate Agency's Affairs Board.

What is a Mandate?

A mandate is a legally binding contract between the estate agent and their client whereby the estate agent is instructed by the client to to render a particular estate agency service.

What is a Sole Mandate?

A sole mandate is an exclusive mandate which means you authorise only one estate agent or agency to render the estate agency services you require.

A sole mandate must (in terms of the law) be in writing.

What is an Open Mandate?

An open mandate (a.k.a a dual mandate) is a mandate that is not exclusive which means that multiple agents or agencies will be able to render the estate agency services you require.

Each estate agency has the right to sell the property, without being required to share the commission.

What is a Joint or Multi-Listing Mandate?

A joint listing mandate (a.k.a a multi-listing mandate) is is a mandate that is not exclusive and where agents from different agencies have the right to sell your property. After a sale, the agent’s commission is split between all listing agencies involved.

What Terms are typically contained in a Mandate?

Section 48 of the CPA requires that a consumer agreement must have fair, reasonable and just terms, which means that a mandate agreement must be correctly drafted, which contains the terms applicable to the mandate to ensure there is no ambiguity regarding cancellation or renewal thereof.

A mandate should include the following terms:

• Scope of services to be rendered by the Estate Agent in terms of the mandate

• Type of mandate entered into (e.g. sole, open or multi-listing)

• Duration of the mandate (Section 14 of the CPA dictates that mandates may only run for a fixed and specified term, of not more than 24 months.

• Purchase Price

• Estate Agents commission and payment terms in respect thereof

• Any other specific terms that are applicable to the mandate

How long is an Estate Agents Mandate?

Section 14 of the Consumer Protection Act (“CPA”) dictates that mandates may only run for a fixed and specified term, of not more than 24 months.

How to Cancel an Estate Agents Mandate?

A mandate with an estate agent can be cancelled at any time by means of a written notice issued with a minimum of 20 days’ notice.

Should you fail to give the estate agent written notice on the expiry of mandate, it will continue to run on a month to month basis until written cancellation is given.

Section 14(2)(d) of the CPA provides that an estate agent is obligated to notify you within 40 to 80 days of their mandate’s expiry, in order to allow time for you to either provide written cancellation or to consent to extending their mandate with the agent for an additional fixed term.

What is Estate Agents Commission?

Estate Agents commission is usually calculated in the case of a sale of a property as a percentage of the purchase price, but can also be a fixed fee or a tiered fee.

Section 48(1)(a)(i) of the CPA requires that the cost for goods or services are fair, reasonable and just and it is for this reason that estate agents’ commissions is typically set at an agreed percentage of the sales price of the property sold.

The average estate agent’s commission ranges between 3% to 8% percent, however there is no regulation in South Africa as to how much commission an agent should be paid per sale.

If you need assistance with a property matter, contact our offices today to schedule a consultation with one of our specialist property law attorneys. Alternatively, you can schedule a consultation online by using the following link Book An Online Consultation.