The Ombudsman Files – Dual agency fees drama
Sellers made a complaint to The Property Ombudsman against an estate agent with whom they had signed a sole selling rights agreement. Rebecca Marsh explains.
The complaint
After receiving a complaint from a seller who had been asked to pay commission to two agents, The Property Ombudsman (TPO) investigated.
Having signed a sole selling rights agreement with one agent (Agent A), sellers went on to advertise with another agency (Agent B) too on a multiple agency basis, after receiving confirmation from Agent A that they were allowed to do so.
A prospective buyer first viewed the property through Agent B, followed by two subsequent viewings through Agent A. The sale was negotiated via Agent A, and they progressed the transaction to exchange of contracts and completion.
Following completion, the sellers promptly settled Agent A’s invoice but were contacted by Agent B seeking payment of their commission, prompting the sellers to escalate the matter to TPO.
The sellers stated in their TPO Complaints Form that they were seeking a fee settlement between Agent A and Agent B and written confirmation that they had no further financial liability.
The findings
Agent A initially operated under a sole selling rights agreement, allowing them to claim commission regardless of the buyer’s source. However, upon the instruction of Agent B, Agent A agreed to convert their contract to a multiple agency agreement.
In an email to the sellers, Agent A explained they had reduced the asking price and stated, “We are also happy for you to instruct another agent and confirm that our fees will remain the same as when we were sole agents.” Consequently, The Property Ombudsman was satisfied that from this point onward, Agent A acknowledged that their commission would be applicable under a multiple agency basis.
The Property Ombudsman was satisfied that from this point onward, Agent A acknowledged that their commission would be applicable under a multiple agency basis.”
Agent A did not dispute that they discussed the possibility of converting the contract to a multiple agency agreement but argued that since they did not hear anything further from the sellers (i.e. as the sellers did not respond to their email), the sole selling rights agreement remained in place. However, the Ombudsman considered that it was reasonable for the sellers to accept Agent A’s statement as confirmation that they were under a multiple agency agreement (and free to instruct another agent) without responding to their email.
While the Ombudsman found no evidence supporting the sellers’ claim that Agent B and Agent A were sharing one set of keys to access the property for viewings (as they had vacated and were living some distance away), Agent A’s contemporaneous notes indicated the sellers were considering an offer presented through Agent B. This demonstrated Agent A’s awareness of Agent B’s involvement and the simultaneous marketing efforts by both agents, supporting the Ombudsman’s conclusion that Agent A had indeed agreed to a multiple agency arrangement.
The Ombudsman was critical of Agent A for failing to take steps to ensure that the agency agreement was either amended to reflect the multiple agency terms or contained in a new contract, in line with the requirements of Paragraph 5x of the Code. Agent A’s actions in not changing the contract to reflect their agreement to convert to multiple agency terms and informing the sellers that they had continued to market the property on a sole selling rights basis after the dual fee situation came to light (despite agreeing otherwise and being aware of Agent B’ instruction) caused the sellers undue and avoidable aggravation and inconvenience.
Ombudsman’s Warning
The Ombudsman criticised Agent A for not asking the buyer if they had previously viewed the property, as per Paragraph 8d of the Code. This question is vital to avoid dual fees, aligning with TPO’s expectation to prevent double charges for the same transaction. While it might be argued that Agent A could claim commission under the sole selling rights agreement due to the lack of a formal amendment reflecting the shift to a multiple agency contract, the Ombudsman concluded that Agent B introduced the buyer.
The Ombudsman deemed it unfair and unreasonable for a seller to face two agents seeking commission for the same property sale unless explicitly agreed upon in advance, which was not the case here. Had Agent A adhered to the expectations outlined in the Code, the situation of dual fees could have been avoided. An amended agreement could have specified that Agent A was entitled to commission only if they introduced the buyer, allowing the transaction to be referred back to Agent B, thereby avoiding Agent A’s fee entitlement.
The Ombudsman deemed it unfair and unreasonable for a seller to face two agents seeking commission for the same property.”
Conclusion
In conclusion, the Ombudsman upheld the complaint, finding Agent A in breach of Paragraphs 1e, 5x, and 8d of the Code, leaving the sellers exposed to dual fees. Agent A’s actions led to two agents seeking fees for the same transaction. Agent B’s legitimate claim for commission was acknowledged, resulting in compensation totalling £10,530 for the sellers, covering Agent A’s fee and an additional £300 for inconvenience and aggravation.
