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As the property market continues to cool, sellers battle to get the high prices achieved in the past and buyers, who are at an advantage, offer as little a price as possible. The first to suffer in this tug of war of negotiation is often the estate agent's commission. In cases where a dispute is driven to legal action, it is not unusual for one party to ask why a particular commission can constitute such a large amount of money if there was really not so much work done. The person asking the question is often the one liable to pay this commission.

Needless to say, if the issue were dealt with beforehand, it would not have been necessary for the parties to incur extra legal costs in this regard.

Nevertheless, agent commission is a reality that must be dealt with and if not, can put a huge financial burden on one of the two parties involved in the transaction.

The following are a few important guidelines which, if followed, can make life much easier for everyone involved.

Unless otherwise agreed, commission is payable by the estate agent's client or the one who gave the mandate. In practice, this is usually the seller.

Although there is no fixed rate on commission prescribed by law, the present rate is 7,5% of the selling price of the property. A person may however agree with the agent beforehand that a reduced amount will be payable.

An estate agent who has been given a mandate to sell a property, will usually earn commission after.

Begin a transaction by introducing a willing and, importantly, able buyer to the seller.

Finalise a legally binding agreement of sale.

Make sure the agent was the effective cause of the sale.

A seller cannot refuse to pay commission because the purchase price differs from the original instruction given to the estate agent. Legally speaking, an agent earns commission if he substantially performs his mandate.

If a contract of sale is subject to a suspensive condition, for example a loan from a financial institution, the agent is not entitled to payment of commission until the condition has been fulfilled. A seller should not try to avoid paying commission by privately negotiating with a purchaser introduced by an estate agent. He will face a claim for commission even if he privately concludes a sale with a purchaser who was originally introduced to him by an agent.

If a person viewed a property through an agent and tells someone else about the property (like a husband his wife), and that person, as a result, purchases the property through another estate agent, the seller may still be responsible to pay the first agent's commission. The seller can only protect himself against such a claim by writing an indemnity into the contract.

An estate agent who introduces a willing and able buyer to a property does not lose his right to claim commission should the property later be sold to that buyer through another estate agent who accepted a lower commission on the transaction.

It is advisable to become well acquainted with the agent you are dealing with and refrain from jumping from one agency or agent to another.

Somerset West attorney Hanlie Visser can be contacted by sending mail to PO Box 1594, Somerset West or by phone on (021) 852-7915. This column does not constitute formal legal advice.

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