Last week, we started discussing practical case studies relating to the Code of Conduct, which we continue with this week.

Agent A does a listing presentation for the seller.  At the end of the presentation, the potential seller thanks Agent A for their presentation and says to Agent A, that he (the seller), will also be meeting with Agent B and will then decide which direction that the seller wants to follow.  Two days later, Agent A calls the seller and the seller tells Agent A, that he has given a sole mandate to Agent B.  Agent A is absolutely furious.  After all, he (Agent A), put a lot of effort into the listing presentation.  It took three weeks to pin the seller down to agreeing to meet and worst of all, Agent A used to work in partnership with Agent B, until Agent B left and went to another agency and there is still a dispute between Agent A and Agent B over a particular client and who was actually entitled to the commission.  Agent A’s principal had decided that Agent A was not entitled to a split of the commission, as the mandate had been given to the agency before A and B started working together.  Agent A is now really upset – he didn’t get the mandate and worst of all, he lost it to his former partner, Agent B!

Agent A decides that he and the potential seller seemed to have a good relationship, so he decides to list the property anyway on various online advertising portals.  Agent A thinks to himself – “I’ll show everyone here who is the best agent!  I’ll sell the property, the seller will be happy and Agent B gets nothing!  Ha ha, that’s fabulous! And my principal will love me.”

Agent A lists the property online using the photos and information that he already had at his disposal.  Two weeks later, Agent A receives a phone call from the seller.  The seller tells Agent A that he was looking at his property online and he noticed that Agent A had listed the property without a mandate and without any permission from the seller.  The seller says, “Please explain yourself Agent A?”, to which Agent A responds, “I know that you gave a sole mandate to Agent B, but I can still list your property as an open mandate, which you can cancel at any time.”

The duties and ethical responsibilities of property practitioners are contained in the Code of Conduct.  Before we refer to the relevant Regulations (Reg) in the Code of Conduct that relate to this case study, let us distinguish between an open and sole mandate.

An open mandate is a mandate that the client, let us say the potential seller of a property in this case, may give to any number of property practitioners.  This means that the client could appoint more than one property practitioner to market their property for sale.  Such a mandate is not required to be in writing (more about this later).  A sole mandate is defined in the Regulations to the Property Practitioners Act as a mandate incorporating an undertaking on the part of the person giving the mandate, not to confer a similar mandate on another property practitioner before the expiry of a determined or determinable period.

Regulation 34.3.1.3 says that a property practitioner may not accept a sole mandate or the extension of the period of an existing sole mandate, unless –

Regulation 34.3.1.3.1 all the terms of such mandate (or extension, as the case may be), are in writing and signed by the client in a manner acceptable in law, including by way of an electronic signature as permitted under the Electronic Transactions and Communications Act, 2002…

Hence, a sole mandate must be in writing.                  

Section 67 of the Property Practitioners Act says:

S67(1) A property practitioner must—

(a) not accept a mandate unless the seller or lessor of the property has provided

him or her with a fully completed and signed mandatory disclosure in the

prescribed form; and

(b) provide a copy of the completed mandatory disclosure form to a prospective

purchaser or lessee who intends to make an offer for the purchase or lease of a property.

If a property practitioner cannot accept a mandate without a completed mandatory disclosure form which would be in writing, how would one do this with an open mandate which is given verbally?  It would therefore seem, that all mandates, open or sole, would need to be in writing!

In terms of Regulation 34.3.1.1, as a property practitioner, you may not offer any property for sale or to let or negotiate in connection therewith, if you do not have a mandate to do so from the seller or lessor. 

In this case, it is quite clear, Agent A is contravening the Code of Conduct by listing the property without a mandate from the seller to do so and Agent A is certainly mistaken if he believes that he has an open mandate! 

Look forward to another case study next week.

You are welcome to contact me on graeme@cpmd.co.za

For more information on all of CPMD’s courses, click HERE

Over the next few weeks, I will be discussing a number of practical case studies relating to the Code of Conduct.

Agent B, who specialises in the marketing and selling of residential property, goes to see a potential seller of a commercial property to do a listing presentation and obtain a sole mandate from the seller.  During the course of the presentation, the seller tells Agent B that he (the seller), has also met with Agent A and is deciding between Agent A and B.  The seller asks Agent B, “why should I choose you and give you a sole mandate?”  Agent B responds, “Agent A is well known for stealing money from his clients, so if I were you, I wouldn’t be dealing with Agent A.”  During the course of the meeting with Agent B, the seller tells Agent B that he wants Agent B to do a valuation on his property.  The seller also mentions to Agent B, that the property has had some problems with rising damp.  Agent B says to the seller, “don’t worry about that, my responsibility is to you as my client and not to any potential buyer.  I won’t be disclosing that to any potential buyers!”

The duties and ethical responsibilities of property practitioners are contained in the Code of Conduct.  The relevant Regulations (Reg) in the Code of Conduct that relate to this case study are as follows:

1. Reg 34.2.1.1 – as a PP, you may not do anything that is or may be contrary to the integrity of PPs in general.  The purpose of this clause is to highlight to PPs that there is a certain standard of behaviour required and as a PP, you may not do anything that is contrary to this expected standard of behaviour.  The comment that Agent B has made about Agent A, would be an example of a contravention of this Regulation.  Agent B is making negative comments about a competitor in order to secure a mandate and this would be considered contrary to the integrity of PPs in general.
2. Reg 34.2.1.2 – in terms of this Reg, you are required to protect the interests of your client at all times, but with due regard to the interests of all parties concerned.  If a seller has given you a mandate, then you need to protect the interests of the seller.  However, you need to demonstrate due regard to the interest of potential buyers as well.  It would not be acceptable for Agent B to take the view he won’t disclose the issues regarding rising damp because he is protecting the interests of his client.  Apart from the fact that Agent B must complete a mandatory disclosure form with the seller when taking a mandate, in terms of Regulation 34.3.2.1, an estate agent shall convey to a purchaser or lessee or a prospective purchaser or lessee of immovable property in respect of which a mandate has been given to him to sell, let, buy or hire, all facts concerning such property as are, or should reasonably in the circumstances be, within his personal knowledge and which are or could be material to a prospective purchaser or lessee thereof.  Hence, full disclosure of the rising damp issues to potential buyers is required!
3. Reg 34.2.1.3 – this Reg requires you to not accept a mandate if the performance of the mandate requires specialised skill or knowledge or the PP has not completed the required qualifications.  An example would be a PP that sells or lets residential property and has a client that wishes to give them a mandate to sell a commercial property, as in this case.  Hence, Agent B should not accept such a mandate as the sale of the commercial property would require specialised skill that Agent B does not have.  Agent B may be assisted by another PP that has the specialised skill or knowledge, but this must be disclosed in writing to the seller, being the potential client.  In addition, Reg 34.2.1.4 requires that every PP must perform their duties with the care and skill that might reasonably be expected of a PP.  This would also be relevant in this case.
4. The request of the seller for a valuation on his property, would also be governed by Reg 34.2.1.3.  Property practitioners may not provide a valuation on a property.  This would require specialised skill or knowledge, which Agent B will not have.  At best, a PP can provide an “Estimate of most probable selling price”.  A “Comparative Market Analysis”, would also be acceptable.

Property practitioners MUST also be aware that ONLY registered valuers can provide a valuation on a property.  It is a contravention of the legislation that governs the Property Valuers profession, for anyone who is not appropriately registered with the South African Council for the Property Valuers Profession, to do a valuation.

Next week we will discuss another case study.  Note the reference to estate agents and not property practitioners in some of the Regulations in the Code of Conduct!

For more information on all of CPMD’s courses, click HERE

 

The last two weeks, I have been discussing alternative dispute resolution in real estate disputes.  Most people are not aware, that referring a dispute to mediation prior to any litigation, is going to become the norm.

In terms of Rule 41A of the Uniform Rules of the High Court (effective since 9 March 2020), at the commencement of any civil action or application, parties must formally consider mediation.  The plaintiff or applicant must serve a Rule 41A notice together with the summons or notice of motion, stating whether they agree to or oppose referring the dispute to mediation.  This notice, which is marked “without prejudice” and is not filed with the court, should include a brief reason for the party’s position that they have taken towards mediation. The defendant or respondent must then serve their own Rule 41A notice by the time they file a plea or answering affidavit and also indicate whether they agree to the mediation or not.  The reason for this process is to ensure that both parties have applied their mind to the use of a mediation as a means of alternative dispute resolution, especially given the time and cost associated with litigation.

Rule 41A defines “mediation” as “a voluntary process entered into by agreement between the parties to a dispute, in which an impartial and independent person, the mediator, assists the parties to either resolve the dispute … or identify issues upon which agreement can be reached, or explore areas of compromise, or generate options to resolve the dispute … by facilitating discussions and assisting in their negotiations.  It is clear, that in terms of Rule 41A, mediation is considered to be an alternative dispute resolution (ADR) process whereby a neutral third-party mediator assists the parties to resolve the dispute and facilitates settlement discussions.  The mediator is impartial and not empowered to make a decision.

Some interesting points to note:

1. Both parties must consent to the mediation process. In the event that one party refuses to mediate, the matter will proceed via the normal legal process.
2. Given that you cannot force the other party to mediate, it goes without saying, that one of the parties could just refuse mediation or not respond to any request for mediation, as a means of being obstructive. The Rules do however provide for potential cost consequences for an unreasonable refusal to mediate.  Rule 41A(9)(b) allows a court, when making a costs order at the end of a case, to have regard to a party’s refusal or failure to participate in mediation.  This means that if a party unreasonably refused to even attempt mediation, the court, when handing down judgement, may penalise that party in terms of the recovery of their own legal costs, or even order them to pay the other party’s costs, because those costs could have been avoided by mediation.
3. In the case of City and Atlantic Real Estate CC t/a Remax Living v Smith and Others(7118/2023) [2024] ZAWCHC 426 (13 December 2024), the court was called upon to determine which of two estate agencies was entitled to the commission from the sale of a house.  I invite you to refer to my blog post number 65 for more details regarding this case.  In its judgement, the court highlighted that, in future, should there be a dispute on similar facts, mediation or some other alternative dispute mechanism should first be considered to resolve the dispute in question, instead of resorting to litigation.
4. In the case of Brondani v Brondani (2021-52977) [2025] ZAGPJHC (17 November 2025), in a landmark decision, the Johannesburg High Court confirmed that mediation is not just a tickbox exercise but a process that needs to be taken seriously.
5. Interestingly, the case of Brondani v Brondani dealt with damages that arose from a case of assault with each party claiming damages from the other. The defendant refused mediation. 
6. The judge in the Brondani case made the following important comments: “The purpose and the aim of the Directive and the Protocol, as expressly provided for in para 2 of the Protocol is to provide a structured standardised yet flexible framework for implementing court-annexed mediation in this Division of the High Court. Importantly, the Protocol aims to promote the use of mediation as an alternative dispute resolution mechanism to alleviate congestion on the court rolls, as well as to enhance access to justice by providing an efficient, cost-effective and less adversarial method of resolving disputes. Moreover, and this is important particularly in casu, the aim of the Protocol is to foster a culture of cooperation and mutual respect among litigants.

The point is that, if regard is had to the purpose and the aim of the Protocol, parties should be excused from subjecting their disputes to mediation only in exceptional circumstances. Extreme acrimony between the parties and the fact that one of the parties to the litigation believes subjectively that the mediation would be a waste of time, are not exceptional circumstances. The stance adopted by the defendant in this matter misses the point of Court-annexed Meditation and loses sight of the fact that a Mediator is an impartial third party who helps the parties identify solutions. The mediator asks questions, reframes issues and helps the parties understand each other. The Protocol also obliges the parties to act in good faith during the mediation process and to participate actively and constructively in mediation sessions.  Moreover, the style of mediation for the Protocol is required to be facilitative in the Mediation Protocol. that the Mediator facilitates a process of communication between the parties, so as to assist the parties to craft their own unique solution to the dispute.

In the result, I make the following order in terms of the Mediation Protocol: –

(1) The defendant shall cooperate in the appointment of a mediator and in the furtherance of the mediation process in accordance with the Mediation Directive and the Protocol thereto.

(2) The defendant be and is hereby compelled to, within ten days from date of this order, deliver an amplified rule 41A notice in terms of para 4.6 of the Mediation Protocol, stipulating inter alia his preference for the administration of the mediation process in accordance with paragraph 3.1 of the Mediation Protocol and the name and relevant details of one or more proposed mediator(s).

(3) The plaintiff shall respond within ten days from date of delivery of the defendant’s aforesaid amplified rule 41A notice, by delivering his further amplified rule 41A notice in terms of 4.6.2 of the Protocol.”

So now you know.  If you or your clients are involved in a legal matter, you are strongly advised to consider mediation.  It is clear from the two court cases above, that the courts are taking a very dim view of litigious parties who refuse to even consider mediation.

If you currently have a dispute that you are dealing with, you are welcome to contact me for any advice regarding mediation or should you wish to appoint a mediator.

You are welcome to email me on graeme@cpmd.co.za.

For more information on all of CPMD’s courses, click HERE

Last week I discussed alternative dispute resolution in real estate disputes and specifically the use of mediation in such disputes.  It is important to note, that as a property practitioner, you have obligations in terms of the Code of Conduct, to prevent disputes.  Let us take a look at an example.

Let us assume that you have a mandate from a seller to sell their property.  Let us also assume that you are having a show house for this property and in walks a potential buyer.  After obtaining the buyer’s details and doing a walk through the property with the potential buyer, this person mentions in passing, that they have actually been to the property previously with another agent.  The potential buyer tells you that they had previously seen the property six months ago with an agent whom the seller had given a mandate to sell the property at that point in time, which you are aware of, as the seller had in fact told you about the previous agent and mandate.

Clause 34.6.3 of the Code of Conduct states that, no agent shall:

34.6.3 introduce a prospective purchaser or lessee to any immovable property or to the seller or lessor thereof, if he knows, or has reason to believe, that:

34.6.3.1 such person has already been introduced to such property or the seller or lessor thereof by another estate agent; and

34.6.3.2 that there is a likelihood that his client may have to pay commission to such other estate agent, or to more than one estate agent, should the sale or lease be concluded through his intervention;

You can see that Clause 34.6.3 clearly says that you may not introduce that potential buyer, if that person has previously been introduced to the property or seller and there is a likelihood that the seller may have to pay more than one commission if you sell the property, being commission payable to you and to the previous agent.  This leaves you with an interesting debate in your own mind.  If you feel that there is no likelihood that double commission would be payable, then you may proceed with that potential buyer.  This is not an objective test and ten agents may arrive at ten different conclusions!

Interestingly, my personal belief is that the previous Code of Conduct was far better in this respect. 

Clause 8.3 of the previous Code of Conduct said that no agent may introduce a prospective purchaser or lessee to any immovable property or to the seller or lessor thereof, if he knows, or has reason to believe, that such person has already been introduced to such property or the seller or lessor thereof by another estate agent and that there is a likelihood that his client may have to pay commission to such other, or to more than one estate agent, should the sale or lease be concluded through his intervention: Provided that the aforegoing shall not apply if the estate agent has informed his client of such likelihood and obtained his written consent to introduce such party to the property or the seller or lessor thereof;

The caveat to the old Clause 8.3 was very clear.  As the second agent, your responsibility would have been to inform your client of the possibility of a double claim for commission and get your client’s permission in writing to introduce the potential buyer.

Although the current Clause 34.6.3 does not require you as the agent to obtain your client’s permission in writing, it is suggested that you do so.  You have an ethical obligation to not expose your client to any disputes and obtaining your client’s permission in writing will protect you in the event of a dispute and is also good practice from an ethical perspective. 

Remember, that in terms of Clause 34.6.3, if you believe that there is a likelihood of a double claim for commission, you may not proceed with the potential buyer, even if you have the seller’s consent in writing to do so.

Likewise, notwithstanding the fact that you do not believe that there is a likelihood of a double claim for commission and you have obtained your client’s permission in writing to introduce the potential buyer, this does not mean to say that your client won’t face a double claim for commission. 

In the event that you sell the property, you would be entitled to be paid your commission and almost certainly, the previous agent will want to claim commission from the seller as well, having also introduced the same buyer to the seller.  In such an event, it is suggested that you refer the matter to mediation to attempt to resolve the dispute before any litigation.  All three parties (both agents and the seller) could attend the mediation proceedings and given that mediation is voluntary and a far more amicable process than the parties resorting to attorneys and a legal process, the chance of successfully resolving the dispute is quite high.

Sometimes disputes happen in property transactions.  What is important is how the dispute is handled once it occurs.  If you currently have a dispute that you are dealing with, you are welcome to contact me for any advice regarding mediation or should you wish to appoint a mediator.

You are welcome to email me on graeme@cpmd.co.za

For more information on all of CPMD’s courses, click HERE

In a previous post, we explored the mechanics of mediation as a tool for resolving disputes in the South African property environment, including the difference between mediation and arbitration, and the implications of Rule 41A of the Uniform Rules of Court. If you have not read that post, it is worth starting there before continuing.

CPMD is now formally offering dispute resolution services through mediation.

What does this mean in practice?

If you are involved in a property dispute or a general commercial dispute and you want to explore mediation as an alternative to litigation, you can contact CPMD to appoint an impartial mediator. Our mediators are accredited with the South African Association of Arbitrators and the Society of Mediators in the UK, which allows for registration as a court annexed mediator.

The process is straightforward. The parties agree to appoint a mediator, a date is set, and the mediator facilitates a structured discussion aimed at helping the parties achieve their own resolution. The mediator is not empowered to make a decision that is binding on the parties. Participation is voluntary and either party can exit the process at any time. The costs are shared and are typically substantially lower than the cost of formal court proceedings.

Who is this relevant for?

This service is relevant for estate agents, property practitioners, buyers, sellers, landlords, tenants, developers, and anyone involved in a commercial relationship where a dispute has arisen. It is particularly useful in situations where the parties want to preserve the relationship, where time is a factor, or where the cost of litigation would be disproportionate to the value of the dispute.

It is also relevant for estate agency principals who deal with commission disputes, sectional title trustees navigating body corporate conflicts, and property managers managing tenant or contractor disagreements.

What mediation is not

Mediation is not a substitute for legal advice. If you are in a dispute, you should still consult your attorney to understand your legal position. Mediation is a structured process designed to assist the parties to resolve the dispute once the parties are ready to negotiate. The two are not mutually exclusive.

How to proceed

If you would like to discuss your matter or appoint a mediator, contact us directly at graeme@cpmd.co.za or call 011 728-7225.

Learn more on our Dispute Resolution Services page.

Given the large number of court cases that we see dealing with real estate transactions, there are clearly many disputes in the real estate environment.  One supposes that this is to be expected given the volume of real estate transaction in the country.  Anyone who has been involved in litigation will know that the process is extremely lengthy and costly.  Taking a tongue-in-cheek approach, we know that there are always two winners in a legal dispute, being both attorneys on each side of the dispute.

There are however alternatives than having to resort to the legal process and litigation.  These are primarily as follows:

• Mediation – in the event of mediation, the parties to the dispute appoint a neutral third party who assists the parties to achieve resolution of the dispute.  The mediator is not empowered to make any binding decisions and is there to facilitate open discussion between the parties; and
• Arbitration – an arbitrator has significantly more decision-making power than a mediator.  The arbitrator in essence is appointed to adjudicate the dispute which is binding on the parties and that the parties have to comply with.

Given the backlog in our court system, with litigants sometimes waiting many years for a matter to get to trial, Rule 41A has been added to the Uniform Rules of Court.  Rule 41A is designed to promote alternative dispute resolution as a way of resolving disputes before the matter gets to trial.  Without going in to all the details regarding Rule 41A, we are moving closer to the point where mediation will become a mandatory process prior to going to trial.  This should go some way to alleviating the backlog in the judicial system and ensuring that disputes get resolved timeously and cost effectively.

Mediation has many advantages:

• It is a relatively simple process to appoint a mediator – the parties would agree on the identity of the mediator and there are few formalities thereafter.  Check that the mediator that you appoint has a formal qualification in mediation.
• Mediation is voluntary and non-binding – the parties enter into the mediation on a voluntary basis and can exit from the mediation at any time.  The mediator does not make any decisions that are binding and the parties do not need to agree to anything should they not wish to do so.
• Mediation is quick and cost effective – as mentioned, the appointment of the mediator can be done swiftly and the mediation proceedings can take place shortly thereafter.  The costs of the mediation are shared between the parties and the mediator usually charges an hourly rate.  In my experience, most successful mediations take between 4 and 6 hours to conclude.
• The relationship between the parties tends to not become as acrimonious as it would with a litigious process.

In my experience, mediation is usually successful with only a very small number of disputes not able to achieve resolution via mediation.  Mediation could be used to assist with dispute resolution between buyers and sellers and landlords and tenants, as well as between buyers and sellers and property practitioners in the event of a commission dispute.

I am personally qualified as a mediator through the South African Association of Arbitrators as well as through the Society of Mediators in the UK and am qualified as a court annexed mediator.  You are welcome to contact me for any advice regarding mediation or should you wish to appoint a mediator.

Next week we will discuss the property practitioner’s duty to avoid disputes.

You are welcome to email me on graeme@cpmd.co.za

For more information on all of CPMD’s courses, click HERE

We are all aware of business entities like a company; but why do people use companies to operate their business affairs?  One of the obvious answers to that question, is that people use a company in order to separate their personal affairs and their business affairs.

In terms of Section 19(1)(a) and (b) of the Companies Act 71 of 2008, from the date and time that the incorporation of a company is registered, as stated in its registration certificate, the company is a juristic person, which exists continuously until its name is removed from the companies register in accordance with this Act and has all of the legal powers and capacity of an individual.

In simple terms, once a company is incorporated, it has the same status as any other person in our law.  In South African law, human beings are natural people and entities like companies, are artificial or legal or juristic people.  Hence, once incorporated, a company becomes a juristic person and can do most things that a natural person can do, like enter into business transactions.

It does happen, that when people do business with companies, that they require the natural people behind the company to take on the responsibilities of the company.  In the property industry, a very common example would be where a company mortgages a property and the bank providing the funding only provides the funding on condition that the shareholders and/or directors of the company sign surety for the company.  In the event that the company cannot repay the debt, the sureties would then be required to do so.

Section 20(9) of the Companies Act makes provision for the piercing of the corporate veil.  This means that in certain instances, the natural people involved with the company cannot hide behind the veil created by the juristic person.  Section 20(9) of the Companies Act says:

Section 20(9)

If, on application by an interested person or in any proceedings in which a company is involved, a court finds that the incorporation of the company, any use of the company, or any act by or on behalf of the company, constitutes an unconscionable abuse of the juristic personality of the company as a separate entity, the court may—

(a) declare that the company is to be deemed not to be a juristic person in respect of any right, obligation or liability of the company or of a shareholder of the company or, in the case of a non-profit company, a member of the company, or of another person specified in the declaration; and

(b) make any further order the court considers appropriate to give effect to a declaration contemplated in paragraph (a).

This means that a natural person may very well become responsible for the acts of a company.

Interestingly, the PPRA’s Code of Conduct, likewise foresees the possibility of a property practitioner (PP) using a company as a front.

Regulation 34.2.1.6 says that a property practitioner shall not through the medium of a company, close corporation or third party, or by using such company, close corporation or third party, or by using such company, close corporation or third party as a front or nominee do anything which would not be permissible for him to do if he were operating as a property practitioner.  A prime example would be where a PP wishes to buy a client’s property that they have just listed but doesn’t want the client to know that it is the PP that is buying the property.  The PP presents an offer from a company, of which the PP is one of the shareholders, and does not disclose this fact to the seller.

Regulation 34.3.1.7 says that a PP may not accept any mandate or instructions for work in respect of immovable property if his interest therein would compete with his obligations towards an existing client in respect of the same immovable property without first disclosing such interest in writing to such client, and

Regulation 34.3.3 says that no estate agent shall purchase directly or indirectly for himself, or acquire any interest in, or conclude a lease in respect of, any immovable property in respect of which he has a mandate, without the full knowledge and consent of the person who conferred the mandate, or sell or let his own immovable property or any immovable property in which he has any direct or indirect interest, to any prospective purchaser or lessee who has retained his services, without that purchaser or lessee having full knowledge of his ownership of, or interest in, such immovable property.

The Code of Conduct is hence very clear about potential conflicts of interest and what to do in the event of such possible conflicts.

Next week we will discuss a very interesting case dealing with a PP using a company in an unacceptable manner and how the Court pierced the corporate veil.

You are welcome to email me on graeme@cpmd.co.za.

For more information on all of CPMD’s courses, click HERE