THE RISK OF HAVING TO PAY DOUBLE ESTATE AGENT’S COMMISSION

Abstract

This note addresses the question whether a seller who mandates more than one estate agent to find a buyer faces the risk of having to pay more than one commission in circumstances where a sale materialises and (a) it is not entirely clear which estate agent engaged by the seller was the effective cause of the sale; or (b) the sale agreement signed by the seller stipulates that commission is payable to one of the estate agents but another estate agent was in fact the effective cause of the transaction. The typical scenario is where the seller gives two estate agents (A and B) an identical mandate, and each agent subsequently shows the property to the same prospective purchaser. They both explain the property’s features, the finance available, their assessment of the market value of the property, and so on. The buyer and seller are keen to buy and sell. One of the following now occurs: (a) A sale transaction is negotiated between the seller and buyer directly, without any further intervention on the part of any of the two estate agents. The seller’s input is minimal, but the facts are such that one cannot determine which estate agent was the effective cause since the value of their efforts towards the sale was more or less identical. (b) A sale is effected by one of the estate agents (say A), using that agent’s standard pre-printed sale agreement containing the usual commission clause whereby the seller agrees to pay commission to agent A. On the facts, however, the input of estate agent B was the effective cause of the sale. Can the seller in either of these situations face the risk of a double commission claim?