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The agent who sold it too soon

Katrine Sporle of The Property Ombudsman (TPO) reviews a case of marketing without the seller’s consent.

Katrine Sporle
Complaint

Link to The Property OmbudsmanThe seller had purchased the property with his partner. The property was in his sole name but his partner had a beneficial interest, as noted in a Declaration of Trust. After their separation, the ex-partner instructed the agent to sell the property, without his agreement. He complained, saying that the agent should not have marketed the property without consent.

Investigation

In accordance with Paragraph 5e of the TPO Code of Practice, the agent was required to take reasonable steps to ensure that the person presenting as the seller was entitled to instruct them. The agent said the seller’s ex-partner gave a copy of the Declaration of Trust prior to formalising the instruction and they considered this to be sufficient.

Katrine Sporle image

Katrine Sporle

In this case, whilst the Declaration of Trust named the ex-partner as having a beneficial interest in the property, she was not named as the owner. The seller was. Therefore, the Ombudsman would have expected the agent to have realised that the ex-partner was not entitled to instruct them.

The agent marketed the property and quickly received an offer. The ex-partner accepted it and at the agent advised the seller about the offer, sending him a letter detailing the offer with a copy of the Agency Agreement signed by his ex-partner. At that stage, he said he felt under duress to agree. He did so and the Memorandum of Sales was issued. However, unhappy with the course of events, the he decided to exercise his right to terminate the Agreement within the 14 day cooling off period. He withdrew his acceptance of the offer resulting in the collapse of the sale. He said he incurred legal costs and was seeking to reclaim those costs and wanted £1,000 in compensation.

It was evident that the seller was aware of the agent’s instruction prior – and after – the Agency Agreement was signed by his partner.

Investigating the evidence presented by both parties, the Ombudsman noted that the agent had not given the seller a copy of the Agency Agreement or sought consent to the terms in the Agreement until they had marketed the property and received an offer.

However, it was evident that the seller was aware of the agent’s instruction prior to this point and shortly after the Agency Agreement was first signed by his ex-partner. At the point of instruction by the ex-partner, the agent had verified the seller’s identification, by way of obtaining copies of his seller’s passport and driving licence, for anti-money laundering purposes in accordance with Paragraph 5f of the Code.

The agent also demonstrated that, prior to marketing, they had emailed the sales particulars to the seller for his approval and he responded with ‘that’s great, thank you’. The seller, however, explained that his response was in fact automated from his email account and did not constitute his approval.

The Ombudsman took into account the seller’s assertion that his response of ‘that’s great, thank you’ was an automated email response, although, an unusual one. However, she considered it reasonable for the agent to take this response as an expression of approval, particularly as no further response followed which expressed any disapproval of the particulars.

The agent had sought the seller’s approval of the particulars before placing the property on the market, in accordance with their obligation to do so under Paragraph 7j of the Code, albeit this did not negate their failure to ensure that the seller had specifically instructed them, and had seen and consented to the terms of their Agency Agreement.

The agent also pointed out the short timeframe between issuing the Memorandum of Sale and the seller’s subsequent withdrawal (four days) and questioned how the legal costs claimed by the seller, which were described as ‘abortive costs’, should have been attributed to them.

Outcome:

The complaint was supported The agent was aware that the ex-partner was not the owner of the property but had accepted instructions from her and had not checked this with the seller at the outset. They did not carry out a consumer fact-find with him, in accordance with their obligations under Paragraph 2e of the Code, to find out his key requirements of any potential sale; or involve him in the process of producing the sales particulars (instead, they sought his input only after the particulars had been produced); or involve him in the discussions and negotiations surrounding their instruction and level of commission fee. It appeared, therefore, that the seller felt he had no choice but to accept the agent’s level of commission fee in the event of choosing to accept the buyers’ offer. This placed him at a disadvantage, as recognised by the seller by his subsequent decision to reject the offer and cancel the agreement.

The Ombudsman did not hold the agent responsible for covering the seller’s legal costs; no evidence of such costs was provided, and it was concluded that the seller had provided his tacit consent to marketing.

Nonetheless, the Ombudsman supported this complaint to the extent described and awarded £250 in compensation for the aggravation caused by the agent’s shortcomings.

June 10, 2020

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