Explainer: How to avoid disputes arising from the services of an estate agent — by Faruq Abbas

Editor’s note: In this piece, Faruq Abbas, MCIArb UK, draws connected the Court of Appeal’s determination successful SDV v. Ojo to research communal pitfalls successful property bureau transactions. He emphasises the request for wide agreements, ceremonial appointments, and elaborate records to debar disputes implicit fees.

It is not antithetic for astir adults and firm bodies successful Nigeria to person had a concern dealing with an Estate Agent for the sale, acquisition oregon lease of a property. In Nigeria, the fees/commission for astir Estate Agents is usually 10% of the full proceeds of merchantability oregon acquisition terms oregon rental worth of the property.

How intelligibly documented agreements tin prevention you from property cause disputes—Faruq Abbas explains. Photo credit: Seksan Mongkhonkhamsao, Westend61
Source: Getty Images

As a effect of the remuneration accruable to Estate Agents successful Nigeria, it is not astonishing that Estate Agency successful Nigeria is populated by each mode of characters. In constituent of fact, the Estate Agency successful Nigeria is not regulated and anybody (including Legal Practitioners and make-up artists) can clasp themselves retired to members of the nationalist arsenic an Estate Agent.

Although the Nigerian Institution of Estate Surveyors and Valuers (NIESV) and the Association of Estate Agents of Nigeria (AEAN) are making efforts to modulate Estate Agency successful Nigeria done the extortion of spot purchasers and buyers by preventing quacks from holding retired themselves arsenic Estate Agents, the efforts of these organisations person not achieved immoderate important effect.

Given that astir everyone has to prosecute the services of an Estate Agent astatine immoderate point, I mean to springiness a bird’s oculus presumption of however members of the nationalist tin debar disputes arising from the services of an Estate Agent, particularly with respect to the outgo of property bureau fees. In discussing this important issue, I shall reappraisal the caller determination of the Court of Appeal successful the lawsuit of S.D.V. Nigeria Limited v. P.K.O. Ojo & Anor (2016) LPELR-40323 (“SDV’s case”).

Summary of the facts of S.D.V. Nigeria Limited v. P.K.O. Ojo & Anor

P.K.O. Ojo was the 1st Respondent successful this entreaty and claimant astatine the precocious tribunal of Lagos state (“lower court”). SDV Nigeria Limited was the appellant and 1st suspect astatine the little court, whilst SCOA Nigeria Limited was the 2nd responsive successful the entreaty and 2nd suspect astatine the little court.

P.K.O. Ojo, a registered Estate Agent, claimed that helium introduced a property, which was up for merchantability to 1 Adebola Adejobi who subsequently brought the spot to the attraction of the Managing Director of SDV Nigeria Limited. According to P.K.O. Ojo, Adebola Adejobi was an worker of SDV Nigeria Limited, but successful the people of the proceedings of the suit, SDV Nigeria Limited established that Adebola Adejobi was the Managing Director of its sister institution (a abstracted ineligible entity) and not its employee. SDV Nigeria Limited subsequently bought the spot from SCOA Nigeria Limited and P.K.O. Ojo requested his Agency Fees successful the sum of $1,250,000.00 (One million, 2 100 and 50 1000 US Dollars) from SDV Nigeria Limited, but SDV Nigeria Limited rejected the petition connected the crushed that it did not name P.K.O. Ojo arsenic its Estate Agent and P.K.O. Ojo were not liable for its acquisition of the property.

P.K.O. Ojo subsequently commenced an enactment for his bureau fees against SDV Nigeria Limited and SCOA Nigeria Limited astatine the precocious tribunal of Lagos authorities and Honourable Justice Gbajabiamila delivered judgement successful his favour by awarding him the sum of $1,250,000.00 (One million, 2 100 and 50 1000 US Dollars) arsenic his bureau fees successful respect of the acquisition transaction.

SDV Nigeria Limited (“SDV”) was dissatisfied with the determination of the precocious tribunal of Lagos authorities and it filed this entreaty against the said decision. The fulcrum of SDV’s statement astatine the Court of Appeal was that it was not obliged to wage P.K.O. Ojo immoderate sum arsenic bureau fees since it did not name P.K.O. Ojo arsenic its cause and it did not go alert of the spot by virtuousness of P.K.O. Ojo’s introduction. SDV besides contended that Adebola Adejobi was not its worker and helium had nary mandate to prosecute the services of P.K.O Ojo arsenic its Estate Agent. SDV further argued that P.K.O. Ojo was incapable to contiguous immoderate documentary oregon credible oral grounds showing that helium was duly appointed arsenic an cause of SDV.

Legal adept Faruq Abbas shares penetration connected formalising property bureau relationships to debar liability. Photo credit: Resolution productions DG
Source: Getty Images

The Court of Appeal agreed with SDV’s arguments and it consequently acceptable speech the little court’s determination principally connected the pursuing grounds:

1. Agency cannot beryllium created done a 3rd enactment successful betwixt the cause and principal, and P.K.O. Ojo could not found a credible and nonstop nexus betwixt himself and SDV;

2. The contented of property bureau fees is an important constituent of bureau narration and P.K.O. Ojo was incapable to found that helium agreed connected a peculiar bureau interest with SDV.

3. P.K.O. Ojo was incapable to amusement that his instauration of the spot to SDV was the businesslike origin that brought astir the acquisition of the spot by SDV.

Nimpar, JCA who work the pb judgement of the Court of Appeal peculiarly held arsenic follows:

“Continuing connected the defect of the 1st Respondent’s case, the contented of fees was undecided passim the play helium claimed to person acted for the Appellant. The contented of fees is 1 important constituent which indispensable beryllium settled successful bureau relationship. In property agency, the important constituent is the committee to beryllium paid. That cannot stay fluid oregon uncertain.”

Nimpar, JCA further held thus:

“To beryllium entitled to committee an cause needs to spell beyond simply introducing a property, I trust connected the aged English lawsuit of Miller, Son & Co. v. Co. v. Ratford (1903) 19 TLR 575 wherever the tribunal held thus:“It is important to constituent retired that the close to committee not originate (sic) retired of specified information that the cause had introduced a tenant oregon purchaser. It is not capable that the instauration was causa sine qua a non. It is indispensable to amusement that the instauration was the businesslike origin successful bringing astir the letting and the sale.”

Take distant from the Court of Appeal’s determination successful SDV’s case

The archetypal and large acquisition from the Court of Appeal’s determination successful SDV’s lawsuit is that a Principal indispensable person agreed connected the bureau fees payable to the Estate Agent anterior to the assignment of the Estate Agent and this indispensable beryllium documented. This is due to the fact that a Principal tin shirk his work to wage bureau fees wherever determination was nary statement arsenic to the bureau fees payable anterior to the closing of the transaction.

Second, erstwhile an Estate Agent is dealing with a Principal who is simply a firm body, it is important that the Estate Agent get a missive of acquisition from the company, arsenic against dealing informally with an employee/representative of the company. This is due to the fact that bureau cannot beryllium created done a 3rd enactment betwixt the cause and principal.

In addition, successful the lawsuit of Nigeria Dynamic Ltd v. Ibrahim (2002) 8 NWLR (Pt. 768) 63 the Court of Appeal held that the specified information that the Respondent had a treatment with officers of the Appellant connected the merchantability of an asphalt works was not capable to found a contractual narration betwixt the Respondent and the Appellant. The Court of Appeal further held that for a contractual narration to exist, the Respondent indispensable beryllium that the officers of the institution had the authorization to make a contractual narration connected behalf of the company. Mangaji, JCA explained this constituent beautifully connected leafage 86 Paragraph A-D of the judgement wherever helium held thus:

“In bid to found a ineligible narration with a ineligible entity it takes much than a communal treatment betwixt a enactment and an serviceman of the institution successful bid that it whitethorn beryllium bound by its officer’s representation.”

Faruq Abbas breaks down the SDV v. Ojo ruling and what it means for property bureau agreements successful Nigeria. Photo credit: Nick correia
Source: Getty Images

It should beryllium noted that the Court of Appeal successful SDV’s lawsuit did not marque immoderate notation to its determination successful Nigeria Dynamic Ltd v. Ibrahim (Supra), but the determination successful this lawsuit supports the determination successful SDV’s case.

Third, for an Estate Agent to beryllium entitled to his fees, helium indispensable beryllium capable to found that his instauration of the spot to his main was the businesslike origin that brought astir the acquisition oregon letting of the spot by the principal. Therefore, wherever the main is capable to found that helium purchased the spot arsenic a effect of an outer factor, the Estate Agent volition not beryllium entitled to person bureau fees successful respect of the transaction.

Lastly, though the instrumentality permits parties to found an bureau narration successful 5 antithetic ways, it is important for parties to ever guarantee that their assignment of an Estate Agent is documented and duly acknowledged by some the Principal and Estate Agent earlier the commencement of the proviso of property bureau services.

To conclude, itt is expected that the determination successful SDV’s lawsuit would assistance to guarantee that parties who mean to participate into an Estate Agency narration are explicit with respect to the presumption governing their relationship.

Disclaimer: It should beryllium noted that this nonfiction is for wide accusation only. It is not offered arsenic advice, connected immoderate peculiar matter, whether legal, procedural oregon otherwise. If you person immoderate questions astir this article, delight interaction the writer astatine [email protected]

Faruq Abbas is the Managing Partner of Abdu-Salaam Abbas & Co., with implicit 15 years of acquisition successful quality solution and alternate quality resolution. Appointed arsenic a Notary Public for Nigeria successful 2022, helium specialises successful commercialized litigation, household law, labour law, spot law, and indebtedness recovery.

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Source: Legit.ng