Property questions answered: We've changed our mind about selling - can we cancel sole mandate?

BY JACO RADEMEYER - JUNE 30, 2016

Question:

We put our property on the market recently, due to financial challenges. Against advice and better judgement, my wife and I were coerced into signing a sole mandate (or exclusive mandate as they called it) with an estate agent. The agent has already advertised in the newspaper and on their website.

Eight couples viewed the property on the first day, but we are now having a major re-think and are reconsidering taking the property off the market. I only realised after the agent had left, that she had not left a copy of the exclusive mandate, but has promised to email a copy. Will we be liable for any costs, if we take the property off the market?

Jaco answers:

A mandate is a contract between an estate agent and his client, and therefore an estate agent must explain to the client the meaning and consequences of the material provisions of the mandate. 

When a client gives a sole mandate to an estate agent, the estate agent will have a ‘monopoly’ to market the client’s property. Should the estate agent find a willing and able buyer for the property at the agreed/mandated price, the client becomes liable for the commission as agreed. The estate agent has to advertise the property in terms of the mandate. During the time period allocated in the sole mandate, the seller may not sell or let his property through another estate agent.

In the ordinary course of events, the client cannot, during the currency thereof, revoke the sole mandate. The Consumer Protection Act (CPA) provides for a five-day cooling off period after which a contract has been entered into for the seller to cancel the contract provided that the mandate was given as a result of the estate agent’s direct marketing methods. 

If the five-day period has lapsed, there is another provision in the CPA that states that a client may elect to cancel a contract by giving 20 business days’ notice thereof, but certain penalties will come into play, which may include telephone calls made and received, time spent in marketing the property and advertising expenses.

An estate agent, who has obtained a written mandate from a client, must, without undue delay, furnish the client with a copy of the mandate (Clause 6.2.3 of their Code of Conduct). Unfortunately, it doesn’t invalidate the mandate if the agent did not comply with the Code of Conduct, but the Estate Agency Affairs Board could enforce a penalty/sanction.