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Agency agreements

When an agency agreement is agreed and signed, you really must not alter the fee! says Katrine Sporle, The Property Ombudsman

Katrine Sporle

Key & contract signing image

COMPLAINT

A case that The Property Ombudsman (TPO) was asked to review came from a seller concerning the agency agreement that was signed by himself, his ex-wife and the agent.

The seller stated that despite agreeing a commission fee of one per cent plus VAT, the copy of the agency agreement held by the agent was altered to an increased fee of 1.25 per cent plus VAT of the total selling price of the property. He only became aware of the higher fee through his solicitor some months after signing the agreement.

The agent did offer a goodwill payment but the seller wanted to find out why the agreement was altered.

After the issue was brought to the agent’s attention, they acknowledged that the copies of the agency agreement were not the same and showed that an alteration had been made. The agent did investigate the issue, but said that they were unable to find any evidence on file of how the fee changed to 1.25 per cent.

The seller was charged and paid one per cent plus VAT as per the original agreement. The agent apologised and offered a goodwill payment of £200 which the seller rejected. His preferred solution was to find out who and why the agency agreement was altered after he had signed it.

INVESTIGATION

Evidence provided showed emails sent from the seller to the agent enquiring about the progression of the investigation into how the agreement was changed. The response back stated that there had been an ‘IT input error’ and that no changes had been made to the contract on their file. They confirmed that they could not find any evidence of changes being made. All they had on file was a photocopy of the agreement showing a one per cent fee.

Katrine Sporle image

Katrine Sporle

A copy of the agent’s file was not provided to TPO and the Ombudsman was critical of this. Looking at the evidence that was provided, the Ombudsman was unable to determine why and when the agency agreement was altered and which member of staff made the alterations. However, there was little doubt that changes were made following the seller signing the document.

The seller provided a copy of the draft completion statement issued to him by his solicitor. This document showed the fee to be £5,490 (including VAT) which equated to a 1.25 per cent commission fee. The solicitor had used the fee provided to him by the agent which was supported by the agency agreement, a copy of which was shown to the seller. Accordingly, on the balance of probabilities, it was considered that the agent changed the agreement independently without the agreement of the seller. The Ombudsman was extremely critical of the agent for their actions.

Furthermore, it was clear that the agent did not conduct a thorough investigation into the issue and did not deal with the seller’s genuine concerns in the correct manner. The seller had sight of the original agreement and the agent’s altered agreement showing 1.25 per cent, which was emailed to the agent. It appeared that the agent lost the altered agreement and all that remained was a photocopy of a version stating a fee of 1 per cent plus VAT.

Taking this into account, the Ombudsman summarised the following events:

The agent had the original agreement showing 1 per cent; changed the document to show a fee of 1.25 per cent; sent a copy of the altered agreement to the solicitor who showed the seller; the agent lost the original amended document showing 1.25 per cent and found a photocopy of the agreement showing the agreed one per cent fee.

As a result, the agent failed to comply with the following obligations under the TPO Code of Practice:

  • not to alter agreed contracts unless they have received written agreement to those changes from their client in accordance with their responsibilities under paragraph 5x of the TPO Code of Practice.
  • keep detailed written records, including contemporaneous progress notes, in accordance with their obligations under paragraph 1i of the TPO Code of Practice.
  • undertake a proper investigation of complaints received, in accordance with the obligations of paragraph 14d of the TPO Code of Practice.
OUTCOME

The Ombudsman supported this complaint and considered that the circumstances merited an award of compensation to reflect the aggravation, distress and inconvenience caused to the seller. The agent’s goodwill offer of £200 was not considered fair, given that the agent amended the agency agreement without consent and did not deal with the complaint in the appropriate manner. Accordingly, an award of £500 was made in compensation. This was in full and final settlement of the dispute.

October 3, 2017

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