Legal requirement for estate agent to tell vendor about buyer's mortgage?

Propertyfan

Hello. First post here.

I've just had a terrible experience trying to sell my home. The deal fell through, quite literally, in the last hour of the conveyancing. The contracts had been sent out to the relevant parties and then the buyer (a man) pulls out due to "personal circumstances."

To cut a long story short, it turned out he had to get a mortgage. He wanted a buy to let mortgage but the bank said no due to the recent credit crunch so he was trying to get a drawndown mortgage. I assume the bank said no to his mortgage application, he didn't have the cash, so the deal fell through.

The problem is the estate agent (a woman) kept telling me he was a cash buyer, had the cash, didn't need a mortgage. She made this clear when he we agreed on the sale price of my property. Not only did the estate agent convince me he didn't need a mortgage, I discovered through email correspondence sent between the agent and the buyer that the agent did not inform me of his need for a mortgage even though in one of the emails sent to the buyer she wrote that she would inform the vendor of the change of plans in his (the buyer's) mortgage application.

She deliberately withheld this information from me throughout the last six weeks of the conveyancing process.

From what I understand:

"The Property Misdescriptions Act 1991 and the Consumer Protection from Unfair Trading Regulations 2008 makes in an offence to make a false or misleading statement - orally, in writing or pictorially - about a property. It is also against the law to make misleading statements to, or withhold vital information from, sellers or buyers. "

I consider withholding information about a buyer's need to acquire a mortgage to buy my property a breach of the above laws. My question is:

Does the estate agent have to disclose the fact the buyer needs to get a mortgage or can he/she do - as was the case in my experience - withhold such information? If anyone can clarify this I'll be extremely grateful. I've searched the internet to try and find the answer but can't find anything that puts my mind at ease.

The whole affair has been very stressful and my opinion of estate agents has hit rock bottom.:( You live and learn from such experiences, I guess, so I know what to expect next time I instruct an estate agent to market my property. I've got rid of the current estate agent and good riddance too.

bylromarha

As I understand it, there is no legal requirement for anything.

Recently selling my mum's house, we had a similar experience. Buyer was cash buyer - but changed his mind half way through and decided to get a mortgage. Kept leading us on, EA not passing on the information.

We nearly lost the sale the day of exchange too as buyer still not happy about lack of mortgage, but when we threatened to put it back on the market, he signed.

So can't tell you the legalities of it, but know that the EA has been shady.

Is this link any use?

http://www.oft.gov.uk/business-advice/estate-agents/#.UevEpW1nA7h

ValHaller

What would you have done if you had known he required a mortgage?

What evidence do you have that you were told no mortgage was required?

cattie

I had a similar experience when selling my last but one house. Buyer claimed to be a cash buyer, who didn't need to sell her existing property to buy,then somewhere along the line decided she needed a mortgage & ended up pulling out quite a long way down the line because of credit crunch beginning & unable to secure a mortgage to buy my house.

I was lucky as I had a full asking price offer the very next morning.

Sometimes it's the buyer that is being misleading about their financial situation, so you need to be clear on that. If he genuinely started out as a cash buyer & then needed a mortgage, would you have then pulled out of the sale? That is again something you have to consider before complaining to the ea.

There are very few vendors who would pull out of a sale just because their buyers financial situation changed & they then needed a mortgage to buy, especially in the current market. It certainly wouldn't be something I'd do.

Propertyfan

Thanks for your reply.

Recently selling my mum's house, we had a similar experience. Buyer was cash buyer - but changed his mind half way through and decided to get a mortgage. Kept leading us on, EA not passing on the information.

We nearly lost the sale the day of exchange too as buyer still not happy about lack of mortgage, but when we threatened to put it back on the market, he signed.

So can't tell you the legalities of it, but know that the EA has been shady.

Your experience sounds very similar to mine! I guess this sort of thing isn't uncommon.

I found out about the mortgage plans and the EA not telling me, by accident. When the agent phoned me to give me the bad news about the buyer pulling out she read his email over the phone. "Dear EA... I am sorry we have to pull out blah blah blah."

I asked the EA to send me the email. She sent it to but she foolishly forgot about all the other emails below that one. Various email correspondence had been forwarded several times. That's how I find out about his need to get a mortgage and the agent concealing the information from me. The agent said she would tell the vendor (myself) about the change in his mortgage plans but she didn't. Had that email not been forwarded to me by mistake I would never have found out.

The affair has been stressful enough so I don't wish to contact an Ombudsmen to see if I have any legal ground to take action against the EA. The good news is I didn't pay any fees to the EA. They're not going to get their commission. If I can find another agency and sell my property in the short term I'll be thankful, and move on with my life.

tim123456789

as the agent is working for you, and not the buyer it is obviously very unprofessional for the agent not to tell you the buyer's position if they are aware of it.

So by all means complain both to the agency and to any professional body they are registered with

but beyond that, unless you can prove that you lost out somehow buy this omission, that's as far as it goes. the sale didn't fall through because of this omission, did it

ValHaller

Propertyfan wrote: »

The affair has been stressful enough so I don't wish to contact an Ombudsmen to see if I have any legal ground to take action against the EA. The good news is I didn't pay any fees to the EA. They're not going to get their commission. If I can find another agency and sell my property in the short term I'll be thankful, and move on with my life.

Check that your are not bound to remain in contract before going back on the market. It may just be worth getting the agent to check whether anyone else who has enquired about the property would still be interested. Otherwise, if you are in contract, I suggest you invite the agent to yours, confront her with the email and sack her for breach of trust. Follow up with a letter asking for details within 14 days of all potential buyers they would claim to have introduced. The probably won't reply, but at least you won't unwittingly get stung for 2 Agents' fees

Propertyfan

as the agent is working for you, and not the buyer it is obviously very unprofessional for the agent not to tell you the buyer's position if they are aware of it.

So by all means complain both to the agency and to any professional body they are registered with

but beyond that, unless you can prove that you lost out somehow buy this omission, that's as far as it goes. the sale didn't fall through because of this omission, did it

I've made a complaint to the agency - a long email has been sent - and it's possible they'll ring me tomorrow so I'll have another opportunity to complain.

What would you have done if you had known he required a mortgage?

What evidence do you have that you were told no mortgage was required?

I have no problem with the buyer needing a mortgage. If he has to get a mortgage and the funds are there to buy my property that's fine with me. It's just that the agent said he had the money, no mortgage was required. It was a verbal communication.

No written letter or email was sent to me when the sale price was agreed stating the buyer does not need a mortgage to secure the purchase of my property. Had I asked the EA for written confirmation I guess they would have fobbed me off with some excuse like "we don't send out letters like that, contact the buyer's solicitor if you're concerned about his financial status."

I've never sold a property before. In this respect I was a bit naive and just assumed people tell you things that are honest. If the EA says he is a cash buyer, has the funds, and no mortgage is needed I assumed this was true. Yes, this does make me sound as if I was born yesterday. :embarasse

Anyway, mortgage or no mortgage - the guy didn't get the cash by the time the contracts were drawn up. The whole thing was a waste of time.

Next time I will ask the EA or the buyer's solicitor to provide written confirmation regarding the mortgage status. And if the buyer doesn't need a mortgage then I'll keep tabs on them and try to get some assurance they're genuine. They can still withhold information, but this unfortunate experience has taught me a lesson not to take comments like "the buyer doesn't need a mortgage" at face value. You live and learn.

ValHaller

Actually, you are probably a little more secure with a buyer who needs a mortgage. You can get worried earlier when no surveyor turns up.

Propertyfan

It's just that the agent said he had the money, no mortgage was required. It was a verbal communication.

No written letter or email was sent to me when the sale price was agreed stating the buyer does not need a mortgage to secure the purchase of my property.

The EA's sales memorandum states:

Remarks or special conditions:

The purchaser is a chain free buyer.

No mention of 'need to get a mortgage'. There doesn't seem to be any legal requirement to mention it. If I get another buyer I will ask for the mortgage details to be added to the sales memorandum or written down in an attached letter. That way I've got it down on paper. It's hard to deny something that's written down on paper. Wording such as:

'Buyer is dependent on mortgage to purchase property.'

If they're genuine they won't object to that sort of wording.

Check that your are not bound to remain in contract before going back on the market. It may just be worth getting the agent to check whether anyone else who has enquired about the property would still be interested. Otherwise, if you are in contract, I suggest you invite the agent to yours, confront her with the email and sack her for breach of trust. Follow up with a letter asking for details within 14 days of all potential buyers they would claim to have introduced. The probably won't reply, but at least you won't unwittingly get stung for 2 Agents' fees

My contract expired during the conveyancing process. I mentioned this in my email to them. They have no legal right to continue marketing my property. I plan to contact a new EA on Monday (more grief!).

Ivana_Tinkle

We had a similar situation when selling last year - our buyer lied about his position; our agent found out but decided not to tell us (in our case, we suspect because the agents within the branch were competing for their commission - she wanted us to sell to "her" buyer, even if that involved huge delays and problems for us). So stressful and horrible - I really feel for you. In fact, I can feel the anger building up again just thinking about it now!

My only advice is to find a new agency. This one has lost the chance to get any commission out of you and they'll care far more about that than any complaint!