AA - June 2020

Author: Maryna Botha
17 June 2020

NO FFC, NO COMMISSION – UNLESS YOUR DUCKS WERE IN A ROW:

Signature Real Estate (Pty) Ltd v Charles Edwards Properties and Others (415/2019) [2020] ZASCA 63 (10 June 2020)  

In accordance with the Estate Agency Affairs Act 112 of 1976, Estate agents are not entitled to earn commission on transactions they negotiated successfully if they were not, at the time of conclusion of the agreement, in possession of a valid Fidelity Fund Certificate.

This requirement is a consumer protection measure as estate agents make obligatory contributions to a Fidelity Fund and the certificate is confirmation that their levy liability to this Fund, is up to date.  In this way members of the public are assured of reimbursement in the event of misappropriation of their monies by an estate agent.

In an important judgment handed down by the Supreme Court of Appeal last week, it was held that in certain very narrow instances, an estate agent will not be precluded from claiming commission where the Fidelity Fund Certificate was not in place at the relevant time.

That matter related to an instance where the estate agent had timeously submitted all documents to the Estate Agency Affairs Board, the latter however accidentally issuing an incorrect certificate in the name of a non-existing entity. This error was subsequently corrected, with retrospective effect.

The Court held that their claim for commission in this instance could not be thwarted by the argument that they were not in possession of a valid Fidelity Fund Certificate at the time.

The full judgment can be viewed here: