The South African Institute of Auctioneers (SAIA) is sounding the alarm for property practitioners to respect the contractual obligations of sole mand
The South African Institute of Auctioneers (SAIA) is sounding the alarm for property practitioners to respect the contractual obligations of sole mandates as ignoring these agreements exposes both agents and sellers to serious legal repercussions.
Legal expert and SAIA board member, Nico Maree reminds auctioneers and property practitioners that sole mandates are legally binding contracts that protect the auctioneer’s significant investment in marketing, valuation and advertising of a property. Bypassing these agreements undermines the entire process, causing financial and reputational harm.
“Auctioneers sign sole mandates with sellers to ensure exclusivity in marketing and selling the property. This agreement allows the auctioneer to commit resources, including extensive advertising campaigns and property valuations, aimed at securing the highest possible price for the seller. The auctioneer shoulders these costs upfront, trusting that the sole mandate will be honoured. It’s crucial that these agreements are respected, as they form the foundation of fair and transparent property transactions,” says Nico.
Property sale
He adds that a sole mandate is a legally enforceable contract under South African law. When an auctioneer holds such a mandate, it grants them exclusive rights to manage the sale of the property. However, cases are emerging where property practitioners, ignoring the legal bounds of these mandates, approach sellers directly with offers, bypassing the auctioneer.
“Any property practitioner who disregards a sole mandate is acting illegally and risks serious consequences. Offending agents can face disciplinary action from professional bodies like the Property Practitioners Regulating Authority (PPRA) and could be sued for damages incurred by the auctioneer. These damages include the costs of advertising, marketing and preparing the property for sale – all investments made in good faith based on the sole mandate agreement. “It’s not just agents who face the fallout from violating a sole mandate. Sellers who entertain offers from unauthorised practitioners while under a sole mandate are equally in breach of contract.
Auctioneers may take legal action against sellers for breaching the agreement, potentially leading to compensation claims. Sellers need to be cautious when approached by agents offering off-mandate deals. These agreements are not only legally risky but can lead to delays, disputes and ultimately a lower return on their property. Auctioneers bring faster turnaround times and are more likely to achieve market- related prices, ensuring a competitive sale process that often results in better outcomes for the seller.
Nico advises Auctioneers should allow for a sole mandate and the exclusion of previous sole mandates in the Regulation 22 Auctioneer mandate which will ensure that the seller will then be requested to address the question of previous mandates including sole mandates, the auctioneer hereby not only protects the seller but also auctioneer and auction house.
SAIA urges auctioneers who become aware of any breach of a sole mandate to act immediately. “Gather all necessary evidence and consult your legal team as soon as possible,” Nico advises. He also recommends engaging with SAIA and the PPRA to file formal complaints against offending property practitioners. “By acting swiftly and decisively, auctioneers can protect their rights and hold violators accountable.”
SAIA is committed to maintaining the highest standards in the auctioneering profession. Sole mandates are a critical part of that, ensuring auctioneers can operate with confidence, invest in the sale process, and secure the best outcomes for sellers. “When practitioners undermine these agreements, they damage not just individual auctioneers but the entire industry,” Nico concludes.