Importance of a Real Estate Agency Agreement: Lessons from Philip Kayode Olusegun Ojo v. SDV Nigeria Limited & Anor.

Real estate deals can move quickly, but the legal rights behind them do not exist on speed alone. In Nigeria, one of the easiest ways for a property transaction to go wrong is for an estate agent to assume that merely introducing a buyer or tenant automatically earns commission. A recent Supreme Court decision shows why that assumption is dangerous. In Philip Kayode Olusegun Ojo v. SDV Nigeria Limited & Anor., the appellant, a professional estate surveyor and valuer, claimed he sourced an industrial property for SDV through an intermediary and later sued for substantial agency fees after the company bought the property directly from the owner. The trial court had awarded him part of his claim, but the Court of Appeal overturned that decision, and the Supreme Court dismissed the appeal.

That case is more than a courtroom story. It is a warning to agents, landlords, tenants, buyers, and corporate occupiers that real estate relationships should be documented properly from the start. It is also a powerful reminder that a real estate agency agreement is not a box-ticking exercise; it is the document that determines whether an agent is actually entitled to commission, on what terms, and for which transaction. Without it, even a successful introduction may not be enough to support a fee claim.

What happened in the SDV case

According to the BusinessDay summary of the Supreme Court case, Philip Kayode Olusegun Ojo, trading as P. K. Ojo & Co., said he sourced the property known as Plots 9, 10 and 11, Awodiora Industrial Estate, Kirikiri, Lagos, for SDV Nigeria Limited through one Adebola Adejobi. Ojo’s case was that he facilitated the negotiations and should therefore be paid agency commission when SDV eventually bought the property from SCOA Nigeria Limited without paying him. He claimed US$1,250,000 as commission, along with special damages and the costs of the action. The trial court granted his claim in part, but the Court of Appeal allowed SDV’s appeal, and the Supreme Court resolved the issue in favour of the respondents.

The significance of the decision lies in the Court’s reasoning. The Supreme Court stated that an estate agent is not automatically entitled to commission simply because he introduced a buyer or tenant to a property. The agent must prove that the introduction was the main and effective cause of the eventual sale or lease. The Court also rejected the notion that a person who voluntarily gives another party information or assistance without a prior agreement is automatically owed compensation for that benefit. In other words, the law does not reward mere helpfulness; it rewards a provable contractual or agency basis for payment.

The Court of Appeal reasoning, as reproduced in the available case summary, was equally instructive. It stressed that the issue of fees is a core element of any agency relationship and cannot be left uncertain. It also emphasized that the agent must prove the introduction was the efficient cause of the transaction, not merely one of several background events. The summary further noted that an estate agent dealing with a company should obtain a letter of instruction from the company itself, not simply rely on informal discussions with an employee or intermediary.

Why this case matters for real estate agency agreements

The lesson is simple: if an estate agent wants to be paid, the relationship must be clear before the transaction closes. A real estate agency agreement protects everyone because it sets out who appointed the agent, what exactly the agent is expected to do, when commission becomes payable, and whether the agent must be the effective cause of the sale, lease, or introduction. That clarity matters in Nigeria because property deals often involve multiple actors, informal introductions, side negotiations, and corporate decision-making that can easily blur the line between “helped” and “earned commission.”

The case also shows why relying on informal WhatsApp chats, verbal assurances, or handshake arrangements is risky. An agent may spend time marketing a property, arranging inspections, and connecting a buyer to a seller, yet still fail in court if the agency relationship and fee entitlement were never documented. The courts are looking for proof, not assumptions. That is exactly why a real estate agency agreement is essential: it turns a social or commercial understanding into evidence that can be enforced.

What a strong real estate agency agreement should do

A properly drafted real estate agency agreement should make the appointment unmistakable. It should state who is appointing the agent, which property or class of properties is covered, what services the agent is authorized to perform, and how commission will be earned. It should also explain whether the agent is entitled to fees only if they procure a willing buyer or tenant, or whether they are paid for a narrower role such as marketing, introduction, or negotiations. The SDV decision makes it clear that “introduction” alone may not be enough unless the agreement says so.

It should also deal with timing. In many disputes, the biggest problem is not whether the agent worked, but whether the parties ever agreed on when payment becomes due. The case summary from the Court of Appeal highlighted that the fee issue should not remain “fluid or uncertain.” That is the practical heart of the problem. If the agreement says commission is payable only on completion, or only when the agent is the effective cause of the sale, everyone knows where they stand. If the document is silent, the agent may spend months proving a relationship that should have been obvious in writing from day one.

A good agreement should also clarify exclusivity, duration, and termination. Is the agent the only one allowed to market the property? For how long? Can the owner deal directly with prospects introduced by the agent? What happens if the agency ends before a deal closes? These are not side issues; they are the points most likely to generate disputes later. The point of the agreement is not only to record a commission rate. It is to map the entire relationship clearly enough that neither side has to guess.

What the SDV case teaches business owners, landlords, and agents

For property owners, the message is that appointment terms should be written down before marketing begins. If you want an agent to act, tell them exactly what you expect and when they will be paid. If you do not want to owe commission for mere introductions, say so clearly. The SDV case demonstrates that courts will not invent a commission obligation simply because a deal eventually went through.

For agents, the lesson is equally serious. Do not rely on goodwill, third-party introductions, or oral understandings. If you are not formally appointed by the principal, you may spend time and effort only to discover that you have no enforceable commission claim. The case summary also underscores the importance of a direct link between the agent and the principal. In the reported facts, the courts were not persuaded that the intermediary relationship was enough to bind SDV to pay the appellant.

For tenants and buyers, a written agency agreement can help prevent double commission demands and confusion over who actually introduced the property. If a landlord appoints one agent, but another person later claims they were the “real” introducer, the result can be a messy dispute. A clear agreement narrows that risk by documenting who was engaged and on what terms.

Why the LegalDoc real estate agency agreement template matters

This is exactly where a professionally structured template becomes useful. The LegalDoc Real Estate Agency Agreement template helps parties capture the appointment, commission structure, scope of work, and other essential terms before anyone starts chasing leads or negotiating offers. That kind of document is not just convenient; it reflects the hard lesson from the SDV decision: if you want the right to commission to be enforceable, spell it out before the transaction happens.

Frequently asked questions

Can an estate agent in Nigeria claim commission for merely introducing a buyer or tenant?

Not automatically. The Supreme Court’s position in the SDV case is that the agent must show that the introduction was the efficient or effective cause of the sale or lease, not just a casual introduction.

Does an oral promise to pay commission count?

It may be difficult to enforce. The case materials stress that the fee arrangement should be agreed in advance and documented. Without clear proof, the claim becomes much harder to sustain.

Why is a letter of instruction important for estate agency work?

The case commentary notes that where the principal is a company, the agent should obtain a letter of instruction from the company itself. That makes the appointment clearer and avoids disputes about whether the right person authorized the engagement.

What is the “effective cause” test?

It means the agent must prove that their efforts were the decisive factor that brought the buyer or tenant to the transaction. Mere introduction is not enough if another factor actually led to the deal.

Is a real estate agency agreement useful even for short-term or informal property deals?

Yes. Informality is often what creates the problem. A short agreement can still protect everyone by defining the appointment, fee entitlement, and when the commission becomes due.

Conclusion

The SDV decision is a strong reminder that property transactions in Nigeria should never be left to assumptions. A person may introduce a buyer, arrange a viewing, or even support negotiations, but unless the agency relationship and fee entitlement are clearly established, commission claims may fail. The courts will look for proof of appointment, proof of the commission arrangement, and proof that the agent was the effective cause of the transaction.