A case that The Property Ombudsman (TPO) was asked to review came from sellers concerning the agent’s fee entitlement. The sellers’ complaint comprised two issues.
The first was the agent did not bring their attention to the different circumstances of the fee entitlement when they signed the Agency Agreement. The second was the agent did not bring any viewers.
The sellers explained that they were approached directly by a neighbour whose parents subsequently viewed, offered and bought the property. They therefore did not believe that the agent was entitled to their fee as they had no contact with the buyers.
The agent created a hybrid by adding a Sole Selling Rights clause making it confusing.
The agent responded saying that their contract stated that a fee was payable if a buyer was introduced either directly or indirectly during the contract period. They referred to a telephone call which took place with the sellers who agreed for them to be involved in the negotiation, qualification and progression to completion.
The agent invoiced the sellers £4,400 (inclusive of VAT).
The 2019 edition of the TPO Code of Practice was considered:
- 5g – to provide a contract written in plain and intelligible language, using the specific definitions in the Estate Agents (Provision of information) Regulations 1991 and must take care in defining and distinguishing between “Sole Agency” and “Sole Selling Rights”
The agent arranged an Open House day, which no one attended, and there were no other viewings at the property. Despite the lack of interest, it was clear from evidence provided that the agent was actively marketing the property. TPO listened to the phone call which the agent referenced and at the start they provided feedback of their actions. The response to marketing was disappointing, but the agent had made the effort to call potential buyers who had offered unsuccessfully on similar properties in the neighbourhood. The Ombudsman confirmed that the agent could not be held responsible for the lack of viewings and did not support this part of the complaint.
Looking at the Agency Agreement signed by the sellers, it stated the following: “You will be liable to pay our fee, in addition to any other costs or charges agreed, if at any time contracts for the sale of the property are exchanged with a purchaser introduced to you by us during our agency period, or with whom we have had negotiations about your property. Or, if Sole Agency is selected, with a purchaser introduced by any other Agent or person.”
The Ombudsman had concerns that the definitions within the Agency Agreement did not comply with the Code as the correct definitions were not used. The agent created a hybrid by adding a Sole Selling Rights clause making it confusing. The agreement did state however that the fee would be due if a sale completes to a buyer introduced by any other person and the Ombudsman considered that the sellers, by signing it, were aware of their obligations.
Also, within the telephone call the sellers told the agent that a neighbour advised that his parents were looking to move to the area and may be interested. A private viewing had taken place, but no offer had yet been received. The sellers wanted the agent to be aware of the development and the agent advised that in such circumstances, they would invoice for the fee, although they did not explain why this was so. The sellers said that if that was the case, they presumed that they would be involved from thereon.
The buyer’s details were exchanged at this point and the agent was then involved with the progressing of the sale with confirmation of draft contracts being sent between the conveyancing teams. It was after this, that the sellers had a change of mind and directed the agent to stay out of any dealings with the sale and denied them permission to correspond with either the buyers or their solicitor. The sellers provided written evidence of their request to terminate the contract. Within the letter it stated that the agent did not introduce the buyer and the Agency Agreement was invalid.
The Ombudsman agreed that the agent had not introduced the buyer. She was, however, satisfied that they were involved in negotiations relating to the sale and provided the sellers with advice. It was clear that the seller was happy with this initially and their late attempt to dis-instruct the agent did not alter their fee entitlement.
However, the lack of clarity in the agreement caused unnecessary confusion and misinterpretation for the sellers. The telephone call was also a missed opportunity for the agent to clearly explain the terms of contact relating to fee entitlement and it should have been followed up in writing. The Ombudsman supported the complaint to the extent that the Agency Agreement caused confusion.
The sellers wanted a refund of their fee of £4,400 but the agreement, as signed by the sellers, did state that a fee would be due regardless of who introduced the buyer. As award of £500 in compensation was made to reflect avoidable aggravation, distress and inconvenience.