The Complainant (the potential buyer) was initially shown around the property (a flat) by the Seller following the Agent failing to attend the appointment. Shortly after, she made an offer via the Agent which was acceptable to the Seller and the sale was agreed. Two days later the Complainant attended an appointment with her mortgage advisor to assess her finances where the subject matter of potential ground rent, service and maintenance charges was raised.

The Complainant showed the mortgage advisor the sales particulars and then telephoned the Agent to confirm that the particulars where correct insofar as they stated no ongoing ground rent, service or maintenance charges were payable.

The Agent confirmed that there was no requirement to pay the said costs at this time and the Complainant proceeded with her mortgage application.

Two months later, towards the end of the transaction, the housing association who managed the building in which the property was situated, wrote to the Complainant stating that as a potential lessee, she would be responsible for paying the service charges that were due (an estimated annual charge of £1,000). Checking with her solicitor who had just received the lease agreement, it became apparent that the housing association was correct. After calculating that she was unable to afford the ongoing costs, the Complainant withdrew from the purchase and wrote to complain to the Agent.

The Agent responded stating that the Seller had confirmed he was not paying any monthly management charge or other costs during their market appraisal and that he had reconfirmed this position to the Complainant during the viewing, adding that the position could change in the future. They acknowledged that this information was reiterated to the Complainant during her subsequent enquiries with them.

Check the particulars

I noted that it had not been disputed that the sales particulars produced by the Agent stated that the Seller had informed them that there were no ground, service and maintenance charges. I also noted that the Seller had approved the sales particulars which stated that there was no annual ground rent, service charge, maintenance charge or other charges. However, I also considered the Agent’s responsibilities under paragraph 7k of the TPO Code of Practice which highlighted that they could become liable if they included anything in the sales particulars which they had reason to doubt was correct.

From the information provided, I considered that the Agent should have realised that it was highly unusual for an owner of a leasehold property, especially a flat, not to be responsible for charges for the maintenance of the communal areas. Whilst I do not expect agents to obtain and review title documents prior to marketing a property, I do expect them to verify that what they are being told by a vendor is accurate, especially if they have any doubts about the accuracy of the information. In my view, the Agent should not have relied on the Seller’s verbal assurances that, as he had not paid any charges, they could advertise the property as having “no ground, service and maintenance charge”. This statement was incorrect and a potential breach of the CPRs. It came to light that whilst the Seller was correct in stating that he had not paid any charges, this was because he had chosen not to pay those charges resulting in a serious buildup of arrears. Whilst I noted that the Agent had made some attempt to qualify the statement in the particulars by adding that this information had been provided by the Seller, their failure to clearly state that this information had not been verified had in my view misled the Complainant.

Assurance & verification

I also took into account that the Complainant received further clarification and assurance from the Agent whilst she with her mortgage lender and that she had relied on this information to continue with her application. Overall, I considered that had the Complainant known the true cost of purchasing the property she would not have made the transactional decision to put forward an offer and therefore would not have incurred legal and mortgage costs amounting to just over £400. I, therefore, made an award of £500.

Agents are the first professionals in any potential transaction and a buyer will rely on their information when considering a transactional decision such as viewing or offering on a property. Accordingly, I would expect all agents to take appropriate steps to verify whether information provided by a seller is correct where their professional experience should alert them otherwise. As this case shows, failure to do so is a potential breach of Paragraph 7k of the TPO Code of Practice which could make an agent liable if they include information in the sales particulars which they had reason to doubt was correct.