Written for Property Poser
Our Property Poser panel of experts has received a query from a reader who has recently bought a property directly from the developer. The reader says when signing the transfer document, he realised that the developer had charged estate agent fees.
The developer explained that he gave a sole mandate to an estate agent and was bound to pay the fee, regardless of whether a buyer bought directly from him or through the agent. The reader wants to know if this is acceptable practice.
Liesel Greyvenstein from Greyvensteins Nortier says when a person buys property from a developer, the information about the development is often available in the form of marketing material like a website or brochure.
If the sale agreement was prepared for the development by his or her attorneys, it will stipulate the purchase price and specifications for each unit, says Greyvenstein.
“The purchase price usually includes VAT, the estate agent’s commission and transfer and bond registration costs. The purchaser will pay this all inclusive price to the developer and the developer then assumes responsibility for the payment of the VAT, commission, transfer and bond costs,” she says.
“When considering the purchase, the buyer has an opportunity to decide whether or not the listed price is acceptable to him or her, taking into account which costs and disbursements will be payable by the developer and which, if any, will be payable by the buyer,” says Greyvenstein.
“When a developer markets a property by listing it with the specifications, the price at which it is being sold and how this price is structured, he or she is basically making an offer to the public to sell the property on the terms and conditions specified in the marketing material or the draft sale agreement.
“A buyer may accept this offer by signing the sale agreement and handing it to the developer. A developer may thereafter not change the terms of the contract unless these terms are agreed to by the buyer.”
Greyvenstein says it is acceptable for the developer to agree with the estate agent that he or she will be entitled to commission, even if they are not involved in a transaction. “If the developer only mentions the commission to the buyer after they had verbally negotiated the lower price, then the buyer may reconsider making a higher offer before committing him or herself in writing to buy the unit.”
Jaco Rademeyer of Jaco Rademeyer Estates says the answer to the reader’s question will depend on the circumstances under which he found out about the agents’ commission.
He says if the reader negotiated to buy at an agreed price under the mistaken belief that it excluded agent’s commission, then the fact that the purchase price included the commission would be irrelevant, as long as the developer assumes liability for payment of the commission.
“The only factor that the reader would have had to consider is the actual price that he would have to pay for the unit, and what other disbursements he would be liable for.
“If, however, the reader understood from the developer that he would pay a lower amount than the marketed price, seeing as no estate agent was involved, then he would have had the opportunity to reconsider making the offer when he read through the draft sale agreement and noticed the higher price and the obligation to pay the agents’ commission.”
Rademeyer says if the reader had already signed the sale agreement for a purchase price excluding agents’ commission, then the developer would not be entitled to amend the sale agreement to include commission without the consent of the buyer.
“If the developer signed the agreement, but added in the additional provision about the commission, then this would constitute a counter offer which the buyer would have to accept before a final and binding agreement would come into existence.”
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