Commission disputes between estate agents are not uncommon - but few have been as clarifying as City & Atlantic Real Estate (RE/MAX Living) vs Kapstadt International Properties. The Western Cape High Court, in late 2024, delivered a judgment that affirmed key legal principles around agency, mandates, and when an agent deserves commission - even if another agent finalises the sale.
For estate agents, sellers, and buyers alike, this case is a must-read. Here’s what went down, what the law says, and what you should watch out for.
What Happened: Factual Background
- On 1 September 2021, Mr & Mrs Smith signed a joint mandate with RE/MAX Living and Kapstadt to market their property. The mandate gave RE/MAX commission (3.5% + VAT) if RE/MAX introduced a buyer during the mandate period or sold the property itself.
- The mandate was valid until 30 April 2022.
- RE/MAX introduced Mr. Pears (a prospective buyer) during the mandate period. Several viewings and negotiations followed, but the Pears offer was initially rejected as being too low.
- Kapstadt introduced another buyer (an American buyer) whose offer was accepted. However, that deal failed because the buyer couldn’t fulfil the conditions.
- Finally, the Smiths accepted an offer from Pears after that failed deal, but the acceptance came via Kapstadt, and this was in February 2023, well after the mandate period had expired.
What the Court Had to Decide
There were three main legal questions:
- Did RE/MAX perform in terms of their mandate (i.e. did they introduce Pears during the mandate period)?
- Was RE/MAX the effective cause of the final sale?
- If so, is RE/MAX entitled to commission, even if the sale was finalized through another agent (Kapstadt) after their mandate expired?
The Court’s Decision
- The court held that RE/MAX was the effective cause: they had introduced Pears within the mandate period, and that introduction was central to the eventual purchase.
- The fact that the final formal offer was accepted through Kapstadt and after the mandate period did not negate RE/MAX’s entitlement. The causal link was maintained.
- Kapstadt’s arguments (that RE/MAX was no longer marketing, that the mandate had expired, that 90 days had passed, etc.) were rejected.
- The Smiths were ordered to pay RE/MAX the commission.
What About the Offer Amounts?
Important point: The published judgment does not disclose the exact amounts of the:
- Initial offer Pears made
- The offer from the American buyer introduced by Kapstadt
- The final accepted offer by Pears
The judgment discusses “higher offer,” “rejected offers,” and “revised offers,” but does not say numbers. So, unfortunately, we can’t share those figures. They might be part of the confidential negotiation details not in public record.
Key Legal Take-Aways
Here are lessons you (agents, sellers, and buyers) should draw from this case:
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Principle
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What It Means In Practice
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Effective Cause
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An agent who introduces a buyer during the mandate period can earn commission even if another agent finalises the transaction - provided the original introduction led substantially to the sale.
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Mandate Clarity
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Mandates (especially joint ones) must clearly state who is introducing whom, rules for overlapping agents, definition of time frames, and what rights agents have if sales happen via other agents.
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Timing ≠ Everything
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The expiration of the mandate does not automatically break an agent’s claim - if the groundwork was laid during the mandate period and the causal link is clear.
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Documentation is Vital
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Records of viewings, communication with buyer & seller, proof of introduction, negotiation steps - all help prove who did what and when.
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Seller Risks
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Sellers who issue joint mandates with multiple agents need to understand they may be liable to pay commission to more than one agent if things are not clearly spelled out - or if the “effective cause” test is met.
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Practical Advice: How to Avoid Double Commission Disputes
- When using joint mandates: define in writing who is responsible for introducing defined prospective buyers.
- Limit the mandate period clearly; but also include what happens with offers introduced during the period after expiry.
- Include a clause about mediation or Alternative Dispute Resolution for commission disputes.
- Keep thorough records (dates of introduction, offers, rejections, communications).
- Sellers should ask agents how they define “introduction,” “effective cause,” and ensure all agents involved are aware.
Conclusion
The RE/MAX Living vs Kapstadt case is a strong reminder that in South African property law, the substance of who drove the sale matters more than formality of who physically submitted the final paperwork. Just because another agent “puts pen to paper” doesn’t mean they earn the commission - what counts is who got the buyer interested and kept them engaged.
If you’re an estate agent, or a seller working with multiple agents, get your mandates drafted carefully. If you’re unsure where you stand in a commission dispute, consult an attorney who knows real estate law - like VDM Attorneys.