In the South African real estate industry, mandates are legally binding agreements between a property owner (seller or landlord) and a real estate agent or agency. These mandates outline the authority granted to the agent to market and facilitate the sale or rental of a property. Understanding the different types of mandates is crucial for property owners and agents to avoid legal disputes and ensure a smooth transaction process.
Below are the main types of mandates used in South African real estate:
1. Open Mandate
An open mandate allows a seller or landlord to simultaneously engage multiple real estate agents or agencies. Under this agreement:
- No single agent has exclusive rights to sell or lease the property.
- Only the agent who successfully closes the deal earns the commission.
- The seller may also sell or rent the property privately, without paying commission.
Pros:
- Wider market exposure.
- Encourages competition among agents.
Cons:
- Can lead to confusion or duplicated marketing.
- Lack of coordinated strategy.
- Risk of multiple offers and potential disputes.
2. Sole Mandate
A sole mandate gives exclusive rights to a single agency or agent to market and sell (or rent) the property for a specific period.
- The seller cannot appoint other agents during the mandate period.
- If the property is sold or rented during the mandate — even through the owner's efforts — the appointed agent is entitled to commission.
Pros:
- Clear accountability and streamlined communication.
- Allows the agent to invest more in marketing.
- Reduces confusion and duplicate listings.
Cons:
- Limits the property owner’s options.
- May reduce exposure if the agent is not proactive.
3. Sole and Exclusive Mandate
This is a stricter form of a sole mandate. It not only grants exclusive marketing rights to one agent or agency, but also prohibits the owner from selling or renting the property themselves during the mandate period.
- Only the appointed agent may negotiate and close the transaction.
- The agent is paid commission regardless of who finds the buyer or tenant.
Pros:
- Total commitment from the agent.
- Clear and controlled sales process.
- Better buyer screening and management.
Cons:
- Total reliance on one agent.
- Less flexibility for the seller or landlord.
4. Dual Mandate
A dual mandate is a middle-ground arrangement where a property owner appoints two agents or agencies to market the property simultaneously.
- Only the successful agent earns commission.
- It offers more exposure than a sole mandate but more control than an open mandate.
Pros:
- Increased exposure.
- Maintains some exclusivity and accountability.
Cons:
- May still lead to duplicated efforts.
- Agents may be less committed than under a sole or exclusive mandate.
Legal Considerations
In South Africa, all mandates must be in writing to be legally enforceable, as per the Estate Agency Affairs Act and the Property Practitioners Act (2022). A mandate should include:
- Duration of the mandate.
- Commission structure.
- Marketing strategy and expectations.
- Termination conditions.
Failure to have a written mandate may result in disputes over commission or representation rights.
Conclusion
Choosing the right type of mandate is an important strategic decision in selling or letting property in South Africa. Property owners should carefully consider their goals, the agent’s capabilities, and the level of involvement they wish to maintain. Consulting with a reputable real estate professional and ensuring the mandate is clearly documented can help ensure a successful property transaction.