Interesting contractual issue re; Covid 19 and EA marketing contracts...

Intenso

It just occured to me that some EA's include a contingency clause in their contracts that if the seller instructs a High Street service and then gives notice on the contract that a fee is payable.

Given that most High Street EA are closed and staff furloughed I wonder whether if a seller was to give notice and the EA sought payement of the contigency fee if there would be grounds to challenge.  This on the basis that the high street service did not provide a high street marketing service.

Its an interesting one as I suspect that if the market does slow down then some seller may be seeking to pull out...

What do you think?

Comms69

Why would anyone, ever pay a premium for a high street presence?...

Intenso

Some do, here's an example from a sale I completed 2 years ago. Now that I think of it it was daft if me not to consider this at the time. However I was confident of a sale and the flat went quick.  Looking at the contract it's vague if this charge would still be payable after the agreed agency period ended.  

Comms69

Yes it is slightly vague i agree. 

Also i dont believe that £500 would cover just a contribution. 

In anycase, i wouldn't sign that. Not with countrywide anyway!

eddddy

Just to clarify - that clause in the contract relates to a statutory 14 day 'cooling off period'.

The Consumer Contracts Regulations require that any service contract purchased 'at a distance' must allow a 14 day cooling off period.

EA's contracts typically have...

• A minimum contract period (e.g. 10 weeks)
• A notice period, once the minimum contract period has finished (e.g. 4 weeks)

But you can still cancel within the first 14 days, but you have to cover any costs that the EA incurred during those 14 days. (But they can only claim actual costs, so they can't claim £500, if their actual costs were less than £500.)

If you terminate the contract after the minimum contract period (e.g. after 10 weeks), some EAs might (or might not) charge you "withdrawal fees" or similar.    But they will be explained somewhere else in the contract.



Edit to add...

Often EA contracts are 'no sale, no fee'...

So if you allow them to market the property for the full minimum contract period - then terminate the contract - there are no fees to pay.

But if you cancel during the first 14 days, you have to pay their costs.