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Multi-agency fees and fairness

Christopher Hamer imageThis case study concerns a dispute referred to The Property Ombudsman (TPO) from a seller complainant concerned about the fee that the agent (Agent 1) charged upon the sale of the property. The complainant explained that Agent 1 charged a multi-agency fee, as the property had been marketed by another agent (Agent 2). The complainant stated that Agent 2 was not instructed market the property for sale, and had confirmed that any marketing carried out by them was in error. The complainant also alleged that Agent 1 gave no prior indication of their intention to charge a multi-agency fee and did not advise that Agent 2 also appeared to be marketing the property.

piggy bank multiple agency fees imageAgent 1’s response was that the property was marketed by Agent 2 throughout the period in which they were instructed, and that, as per the terms of their Agency Agreement, a multi-agency rate commission fee was payable.

The facts

I began by explaining that no complaint had been brought against Agent 2, and therefore I was unable to consider their actions. For clarity, I understood that Agent 2 had been informally instructed in the sale of the property by the complainant’s parents in 2012. The parents at no time owned the property, and, as such, had no legal standing upon which to formally instruct Agent 2. Agent 2 confirmed that they had no further involvement with the property beyond 2012, however, the records submitted by Agent 1 indicated that the property continued to be marketed by Agent 2 throughout 2013 and into 2014. I saw no evidence to suggest that Agent 2 was, at any time, formally instructed by the seller to market the property for sale.

The seller did not formally instruct Agent 2 so there was no contractual entitlement for Agent 1’s multi – agency fee.”

In 2013 the complainant instructed Agent 1 on a sole selling rights basis. The agency agreement confirmed that a fee of 0.8 per cent (plus VAT) of the sale price would be payable upon the sale of the property where Agent 1 acted on a sole selling rights basis, but that a fee of two per cent (plus VAT) was payable where Agent 1 was instructed on a multi-agency basis, that is, alongside one or more other agents. The agency agreement confirmed that a multi-agency fee would become payable if a seller who had instructed them on a sole selling rights basis went on to instruct another agent without any or ‘adequate’ notice.

In the circumstances of this case, I was satisfied that the complainant had not formally instructed Agent 2 in the sale of the property before Agent 1 was instructed and that the complainant did not go on to issue such instructions to Agent 2 thereafter. I was not, therefore, persuaded that the contractual entitlement for Agent 1 to charge a multi-agency fee was triggered.

The decision

It was my view that in order for the complainant to be liable for a multi-agency fee, the act giving rise to that liability, in this instance the marketing of the property by Agent 2, had to be at their instruction. I did not consider that it fair or reasonable for the complainant to be financially penalised by Agent 1 as a consequence of the unilateral actions of Agent 2, particularly given that Agent 1 did not inform the complainant when they saw that Agent 2 was marketing the property and did not otherwise inform the complainant of their intention to charge commission at the multi-agency rate.

I upheld this complaint as I did not consider that Agent 1 was contractually entitled to the multi-agency commission fee of two per cent (plus VAT) that was charged. The complainant had paid this fee in full on a without prejudice basis in order to avoid court action. Accordingly I directed the agent to reimburse the complainant the difference between the multi-agency fee that was paid and the sole agency fee of 0.8 per cent (plus VAT) that I considered was properly due.

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