Tales of Woe: What Happens When An Estate Agent Doesn’t Work Out?

The estate agent trade isn’t suited to everyone, and there are more than a few instances where the estate agent and various sellers or buyers have fallen out. In most cases, this is resolved by changing estate agents or not using them again, but in more serious cases, The Property Ombudsman gets involved. Here are some actual case studies where complaints were received by the ombudsman and how they were resolved.An Estate Agent Doesn’t Work Out

Lettings Can Go Wrong

An estate agent was also functioning as a lettings agent, and they were instructed by landlord to source and reference a tenant. However, the agent didn’t do the referencing themselves; instead, they palmed it off to a third party. That third party informed the agent that they hadn’t verified the tenant’s ID. The agent neglected to tell the landlord, instead informing him that the tenant had passed referencing. On this basis, the tenancy was granted.

Unfortunately, the tenant then neglected to pay past the first month, and they required evicting. After lengthy court proceedings and substantial costs, the landlord received a judgement of £20,972 from the courts.

However, an enquiry regarding the referencing showed that had the tenant been required to show appropriate ID – as is now legally required – it would have shown their true name and showed that a previous landlord had obtained a judgement for £12,500 for unpaid rent. Naturally, this would have disqualified the tenant from renting. The Property Ombudsman upheld the complaint and made an award of £21,972, mainly because there was little chance of the tenant settling the debt given previous judgements and because the agent had failed to conduct an appropriate check when requested.

Although this deals with a lettings agent, it shows that agents are required to fulfil their duties as stated and should not cut corners. If you find an estate agent is cutting corners, it may be wiser to change.

Freehold Or Leasehold? This Agent Didn’t Know

A well-established agent was told by a buyer that they wanted to find a freehold property, and the agent suggested one on their books. The advertising didn’t show whether the property was freehold or leasehold, and the agent felt it wasn’t their duty to find out. They also felt that there was no material difference between freehold and a long leasehold.

This is not correct, as there are major differences between long leaseholds and freehold, with leasehold properties depreciating severely when they reach 80 years.

The buyer made a number of enquiries, ordered a survey and started the process of buying the property, only to withdraw as soon as she was informed that it was actually a leasehold property. The buyer made a complaint to The Property Ombudsman regarding the transaction, as they hadn’t been provided with accurate information, and the estate agent hadn’t disclosed the information that it was a leasehold property.

The buyer was awarded £1,300 for legal fees, the cost of a survey and the inconvenience that they had undergone.

This case dealt with the fact that an agent didn’t disclose a major factor that affected the purchasing decision, and agents have a duty to ensure that the particulars of a property are correct. The tenure – in this case whether it was freehold or leasehold – is one of those things that an agent should routinely check, so the agent was appropriately censured.

Parking Became a Pain: Not All Complaints Are Upheld

Estate agents aren’t always at fault if a property isn’t quite as described. In this case, the buyers had purchased a property because it had vehicular access to the rear. Once they had purchased the property, however, they were informed by a neighbour that she owned land that they would have to cross over, and they didn’t have a right of way over it.

The seller had confirmed all the details, which was noted in the branch file, which is the file that contains all the details of the property and all correspondence with the seller and potential buyers. That branch file regarding the property showed that the estate agent had confirmed with the seller that access to the rear of the property was routine, and there was no indication on the property itself that access was anything other than a right of way.

Because estate agents are not expected to have access to the Land Registry documents that show who has rights of way over what, the seller should have made use of property searches conducted by their solicitor.

As a result, the complaint was not upheld and no compensation was awarded.

In this case, The Property Ombudsman considered that the estate agent had acted in good faith and had no reason to believe that the marketing was anything other than accurate. Indeed the seller noted that owners of the property had been driving to the back of it for the past 40 years, and that likely factored into the decision. This is why it’s good to use a solicitor and conduct appropriate property searches to ensure that you have right of way over any land that you need to cross.

No Hidden Fees – But a Performance Fee Was Charged

Contracts are often a little confusing, but this one was at odds with the marketing materials that accompanied it. An estate agent had advertised a fixed fee price with “no minimum term, no commission, no hidden charges.” As a result, the seller chose a pay monthly option, and signed a contract.

The agent came to the house and took photographs, and an offer was accepted an offer that was significantly higher than the asking price. The sellers then received an invoice for 10% of the difference between the asking price and the accepted offer. Naturally, the sellers were somewhat annoyed, as they had been under the impression the “no hidden fees” and “no commission” claims were true. The Property Ombudsman was asked to intervene.

The website was unambiguous in that there were no hidden fees, and the performance fee was not even mentioned prominently – it was hidden away in a single section near the end of the document.

Based on the fact that the claims on the website were misleading, The Property Ombudsman upheld complaint and stated that the sellers did not have to pay the additional fee.

Estate agents have a duty to market their fees honestly, which means that they are not allowed to hide away fees in their contracts. Hidden fees may also breach the Consumer Protection from Unfair Trading Regulations Act, as well as The Property Ombudsman Code of Practice. Although no financial award was made because the seller hadn’t paid or lost anything, the estate agent was put on notice that the fee was considered unfair.

Ultimately, The Property Ombudsman is there to help protect consumers and to ensure an even playing field for estate agents. For more information you can visit their website at https://www.tpos.co.uk/.