Property Practitioners

Making Your Commission Clause Watertight: What Every Property Practitioner Should Check in an OTP

The commission clause is often the shortest clause in an OTP, and the one most likely to cause a dispute. This instalment in our OTP drafting series covers what makes a commission clause enforceable, and how to protect your fee when a deal falls apart.

28 July 2026 Cor van Deventer 6 min read

Most practitioners assume their commission is safe once the offer is signed. It isn't, not automatically. Commission disputes are one of the most common reasons agents end up in the Estate Agency Affairs Board's complaints process or in front of an attorney, and almost every one of those disputes traces back to a commission clause that didn't say enough.

This article covers what a properly drafted commission clause needs to include, and why each part matters.

Confirm you were the introductory cause

Before anything else, the clause needs to record that you (or your agency) were the effective cause of the sale. This isn't a formality. If a dispute arises later, whoever drafted the OTP wants a clear paper trail showing the seller and purchaser both acknowledged, at the time of signing, who introduced the parties.

State the amount, unambiguously

Commission should be recorded as either a percentage of the purchase price or a flat fee, never left vague or implied. State clearly whether the amount is inclusive of VAT. This single line prevents more disputes than any other part of the clause, because “commission as per agency agreement” or similar shorthand gives both parties room to argue about it later.

Separate when commission is earned from when it's payable

This is the part most DIY commission clauses get wrong. Commission is earned once the agreement is signed and any suspensive conditions are fulfilled or waived. It only becomes payable on registration of transfer. Collapsing these two events into one line is where practitioners lose money, because if the clause only ties payment to “earning,” there's no clear trigger forcing the conveyancer to actually pay out.

Authorise the conveyancer directly

The clause should give the conveyancer irrevocable authority to pay your commission from the proceeds of sale on registration, to the extent proceeds allow. Without this authorisation sitting inside the OTP itself, you're relying on the seller's separate mandate or goodwill to get paid, which is a weaker position if the seller becomes uncooperative.

Cover what happens if the deal falls over

This is where most commission clauses fall short. A deal can collapse in three different ways, and each one needs its own provision:

Purchaser default. The purchaser should be liable for the commission as liquidated damages, without this affecting your claim against the seller under the agreement or otherwise.
Breach by either party. You should be immediately entitled, though not obliged, to claim commission from whichever party is at fault.
Mutual cancellation. If the seller and purchaser simply agree to walk away, you're still entitled to commission from both, jointly and severally, with whichever party pays able to claim half back from the other.

Leave any of these out, and you're relying on the parties' goodwill after a deal has already gone sideways, which is exactly when goodwill tends to disappear.

Address commission sharing properly

If you're splitting commission with another agency, don't leave that as a side arrangement. Instruct the conveyancer directly, in the OTP, to pay each agency its agreed split. Then deal with VAT correctly:

If both agencies are VAT vendors, each invoices for its own share plus VAT, and each accounts to SARS separately.
If the other agency isn't VAT registered, your agency invoices for and receives the full commission including VAT, pays the other agency its share excluding VAT, and carries sole responsibility for accounting to SARS on the full amount received.

Getting this backwards is a common source of VAT compliance headaches for both agencies involved, not just a drafting nicety.

Final thoughts

A commission clause doesn't need to be long to be watertight. It needs to name the introductory cause clearly, state the amount without ambiguity, separate earning from payment, authorise the conveyancer directly, and account for every way a deal can unravel. Most disputes come from clauses that skip one of these, not from bad faith on either side.

Example clause

COMMISSION

The SELLER and PURCHASER both agree that [PROPERTY PRACTITIONER NAME] was the introductory cause of the PURCHASER and is therefore entitled to the full commission.

The SELLER shall pay commission in the amount of:

COMMISSION: ____% of the purchase price (inclusive of VAT)

FLAT FEE: ZAR ____ (inclusive of VAT)

Commission payable to the PROPERTY PRACTITIONER shall be inclusive of VAT. Such commission shall be deemed earned upon signature of this Agreement by both the PURCHASER and the SELLER and the fulfilment (or waiver, as the case may be) of all suspensive conditions contained herein, and shall become due and payable upon registration of transfer of the PROPERTY into the name of the PURCHASER, or upon cancellation in the circumstances contemplated in clause 16.4.

The SELLER irrevocably authorises the Conveyancer to pay the commission to the PROPERTY PRACTITIONER from the proceeds of the sale on registration of transfer, to the extent that the proceeds are sufficient to cover such payment.

Notwithstanding the above, should this offer be accepted and the resultant agreement of sale subsequently be cancelled:

If the agreement is cancelled as a consequence of default by the PURCHASER, the PURCHASER acknowledges that he/she/it shall be liable to the PROPERTY PRACTITIONER for payment of the equivalent of the commission by way of liquidated damages, without prejudice to the rights of the PROPERTY PRACTITIONER against the SELLER in terms of this Agreement or otherwise.

If the agreement is cancelled as a result of a breach by either the PURCHASER or the SELLER, the PROPERTY PRACTITIONER will immediately be entitled, but not obliged, to claim payment of the commission from the party at fault.

If the agreement is cancelled by the SELLER and PURCHASER by mutual consent for whatever reason, the PROPERTY PRACTITIONER will immediately be entitled to payment of the commission from the SELLER and the PURCHASER, jointly and severally. The party making payment may claim from the other party one half of the amount so paid.

COMMISSION SHARING AGREEMENT

Should the commission be shared with another agency, the Conveyancing Attorneys are instructed to pay the commission directly to the respective agencies as follows:

AGENCY: ____ SPLIT (%): ____

Where both parties are VAT vendors: each party shall invoice the conveyancing attorney or the party responsible for payment of commission for its agreed share of the commission, together with VAT where applicable, and each party shall be responsible for accounting to SARS for its own VAT obligations.

Where the other PROPERTY PRACTITIONER is not a VAT vendor: [PROPERTY PRACTITIONER NAME] shall invoice for and receive the full commission, including VAT where applicable. The non-VAT registered PROPERTY PRACTITIONER shall invoice [PROPERTY PRACTITIONER NAME] for its agreed share of the commission, excluding VAT only. [PROPERTY PRACTITIONER NAME] shall pay such amount to the non-VAT registered property practitioner or estate agency upon receipt of the commission and shall be solely liable for the payment and accounting of VAT to SARS on the full commission received.

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