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No FFC, no commission – unless your ducks were in a row

Estate agents are not entitled to earn commission on transactions they negotiated successfully if they were not, at the time of conclusion of the agreement, in possession of a valid Fidelity Fund Certificate. This requirement is a consumer protection measure as estate agents make obligatory contributions to a Fidelity Fund and the certificate is confirmation that their levy liability to this Fund, is up to date. In this way members of the public are assured of reimbursement in the event of misappropriation of their monies by an estate agent.

In an important judgment handed down by the Supreme Court of Appeal last week, it was held that in certain very narrow instances, an estate agent will not be precluded from claiming commission where the Fidelity Fund Certificate was not in place at the relevant time. That matter related to an instance where the estate agent had timeously submitted all documents to the Estate Agency Affairs Board, the latter however accidentally issuing an incorrect certificate in the name of a non-existing entity. This error was subsequently corrected, with retrospective effect. The Court held that their claim for commission in this instance could not be thwarted by the argument that they were not in possession of a valid Fidelity Fund Certificate at the time.

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This article is not intended to constitute legal advice and is produced for information purposes only and to provide a general understanding of the legal position relating to the topic. It is recommended that advice relating to the specific circumstances of your situation be sought from our attorneys before acting upon the content of this article. This article was written at a particular point in time and accordingly may not always reflect the most recent legal developments, if any, applicable to the relevant topic. Kaplan Blumberg and its partners and/or employees, are not responsible for any consequences which may follow upon any decision taken to act upon the information provided in this article.

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