Does my estate agent become a party to the offer to purchase?

Let us sketch a basic scenario here. You have made use of an estate agent to either sell or purchase a property. A transaction was concluded on the standard offer to purchase document provided by the agency bearing their letter head and all their details. The question may arise as to what the agent’s role as part of the contract is. Are they now a party to the sale or what?

 

Primarily, it is important to note that the estate agent is not a party to the contract. The sale agreement is only between the seller and purchaser and all the terms set out in the offer to purchase documents is between them. It is a common principle in our law that only the parties to a contract can acquire rights and obligations However, an exception occurs when one deals with a contract for the benefit of a third party.

 

In this instance, the parties to the contract agrees to have a certain right or benefit accrue to a third party, the estate agent. This is normally done under the commission clause in the offer to purchase whereby the seller agrees to pay a certain percentage of the selling price to the agent. Very important for estate agents to note is that they (the third party) must accept this benefit for them to gain an enforceable right in respect of the commission payable to them. This is normally done by the agent by affixing his or her signature on the offer to purchase with the words “We accept the benefit of this agreement” or something alike.

 

This article serves as a general discussion and should not be taken as legal advice. Please contact us should you have any questions.

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