Estate agents have lost the right to commission if a buyer to whom they show a property then makes an offer through another joint agency.

Three senior appeal judges said that Foxtons was not entitled to a £20,000 fee after a buyer they had initially introduced to a £1.15 million home went to a joint agent that was marketing the property. In a test Court of Appeal ruling that clarifies the law on estate agents’ commission, they said that commission was only payable if the agents had already persuaded the buyer to make the purchase.

But if they introduce a prospective buyer who then goes away and later makes an offer through another agency, they cannot claim their commission fees, the judges said.

The case brought by Foxtons, one of London’s biggest agencies, effectively puts an end to estate agents demanding their fee even if they do not eventually sell a property and the buyer goes to a rival.

Foxtons had introduced a buyer to Treld Bicknell, the vendor, but no deal was reached. The same buyer later agreed to buy the property after he was contacted by another agency. Foxtons – whose founder Jon Hunt sold out his share for almost £400 million last year before the property slump – agreed to advertise the property in October 2004 for £1.4 million as the sole agency. When the agents failed to find a buyer, Mrs Bicknell called in Hamptons as a joint agency.

In October 2005, Hamptons sold the house to Alisdair Low, who had initially looked round the property when it was with Foxtons but had decided not to buy because his former wife claimed that it needed too much work doing on it.

Hamptons received its fee, but Foxtons did not. Foxtons relied on a clause in the contract stating that it was due commission if Mrs Bicknell sold to a purchaser introduced by it.

The ruling by Lord Justices Waller and Rix, sitting with Lord Neubeger of Abbotsbury, overturns an early decision at Kingston-upon-Thames County Court. They said that Foxtons needed to have “introduced the purchaser to the purchase” and not merely to the property.

The ruling could affect thousands of house sales a year and save thousands of sellers paying agents.