12 October 2023
In the rental space, the necessity of a Rental Mandate is questioned from time to time. Should a Landlord decide to appoint a rental agent to manage their property, or just procure a tenant, it is essential that a rental mandate is signed, outlying the responsibilities and obligations of each party. While a Lease Agreement is a contract strictly between a Landlord and a Tenant; the Rental Mandate is the contract a Landlord would have with their appointed rental agency, giving the agency the authority to lease their property.
What needs to be pointed out to Landlords is that all Property Practitioners are governed by the Property Practitioners Regulatory Authority which clearly states in Section 34.3 of the Property Practitioners Regulations: “No estate agents shall offer, purport or attempt to offer any immovable property for sale or let or negotiate in connection therewith or canvass or undertake or offer to canvass a purchaser or lessee therefor, unless he has been given a mandate to do so by the seller or lessor of the property.” The Regulations then go on to state that “No estate agent shall accept a mandate or the extension of the period of an existing mandate, unless 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...”
Therefore, it is imperative to have a Rental Mandate that is signed and in place in order for the agency to legally advertise and market a property.
The Rental Mandate will spell out the process that the Landlord and agency agree will be used to appoint a Tenant, the agreed functions and duties of the agency in administering the lease, and management of the property. It will cover, amongst other terms, the marketing and advertising commitments made by the agency; the rental amount agreed to by the Landlord; the commission amount payable to the agency, and; the acknowledgement by both parties that the property has been valued correctly and is in a suitable condition to let out.
As stipulated above, it is a requirement by law to have a Rental Mandate in writing. Should a situation arise where a mandate is not in place, the Landlord could face a few of the following disadvantages:
- It could open up the potential possibility of other agents taking advantage of the Landlord, which may open them up to a double commission payment
- There is no amount agreed to in writing as to the rental amount of the property
- There is no amount agreed to in terms of commission due to the agency
- There is no guarantee that the agency is qualified to rent out the property in terms of the Acts that govern them
- There is a danger of the underperformance of the agency and no legal recourse that the Landlord can take against the agency.
By having a Rental Mandate in place, both the Landlord and the agency understand all obligations required of either party, providing a seamless letting journey for the duration of the lease agreement, or any extension thereof.