The sign of the devil - Agent off the hook

Taljaard v Botha Properties (666/06) [2008] ZASCA 38 (28 March 2008)

CASE NO: 666/06

Some people may say this is the Sign of the Devil – if you look at the case number.

But, not to pay the agreed commission to an agent that does not have a fidelity fund certificate is not on – they had a deal the judge said.

The estate agency (Botha Properties) has won a court victory that will support estate agents who sell property without having a valid fidelity fund certificates.

The Supreme Court of Appeal of SA ruled that a seller does not have the right to have commission returned if it emerges that the estate agent was operating without a fidelity fund certificate.

The delay in issuing of Fidelity fund certificates by the EAAB are a sore point in real estate sales' circles right now - A war of words is taking place in the media between agents and Ms Mapetla of the Estate Agency Affairs Board (EAAB), after it emerged that many estate agents are not in possession of valid fidelity fund certificates.

According to the previous interpretation of the law, estate agents who do not have a valid certificate when they act as agents are not entitled to commissions earned. This seems to have been overturned by this case. As judge Nugent said:

“It seems to me that that misconstrues the purpose of the section. It was not enacted for the benefit of clients who have incurred a contractual obligation to pay remuneration to an estate agent who has performed his or her mandate – I have already held that the contract giving rise to the obligation remains valid notwithstanding the breach of s 26 – but rather to penalize estate agents who have breached the section. An estate agent who claims remuneration in conflict with s 34A might expose himself or herself to criminal sanction, and will be prevented from enforcing his or her claim, but I do not think it follows by necessary implication that a client who has settled his or her contractual obligation is accorded a right of action for its return.”

Nugent dismissed the client's appeal with costs.