Being chased for a 2nd estate agency fee

Phantom96

eddddy said:

movilogo said:

This could lead to an interesting situation. Say you list your house via EA1 at price £x. You get Mr Buyer who didn’t like the property. Then you move away from EA1 and instruct EA2 to market your property. EA2 advised to reduce price to £y. Same Mr Buyer came back as he liked the house now at £y and eventually buys it.

Clearly EA2 should get the fee here. But can EA1 claim fee too? EA1 has not caused the purchase but EA2 did.

That situation should be very clear.  Lets call the eventual buyer 'Mr B'.

• Mr B was introduced by EA1.

• If the Mr B comes back later, they should only ever talk to EA1. They should have no contact with EA2 at any point.

• It is irrelevant that EA2 is now marketing the property - Mr B should only deal with EA1

• (The Property Ombudsman's rules say that if Mr B approaches EA2 - then EA2 must send them back to EA1.)

Therefore:

• EA1 gets their fee for introducing the eventual buyer

• EA2 gets nothing, because they played no part in the sale

Edit to add...

The Property Ombudsman rules also say that EA2 should explain all the above to the seller. If EA2 fails to do so, and EA2 tries to claim a fee, I suspect the Property Ombudsman would rule against EA2.

Interesting, thanks.

In our case EA1 is the original EA we had marketing the property and who eventually proceeded the sale. They happen to be a member of TPO. I have yet to talk to them about any of this.

EA2 is the 2nd agency who we introduced as a joint agent then later dropped. They are a member of the PRS, who we have complained to about all of this.

If what EA2 is saying is true about having introduced the buyers to the property first, and presumably by introduced what happened is the buyer called in after seeing an online advert, though again I stress their names were never sent to us at any point - how do we know the buyers even mentioned to EA1 that they'd seen it online already and had a conversation with EA2 about it? It seems to me like they just went ahead with the viewing through EA1 without raising it, otherwise I'd expect they would have called up EA2 to ask what was going on and attempt to proceed through them? I have had no suggestion that this happened otherwise EA2 would have sent me a bill long before now I expect and would probably have argued the toss at the time to be allowed to do a viewing.

If EA1 was made aware of the fact that EA2 had indeed already spoken to the buyers about the property, but chose not to send the buyer back to EA2, could they be liable to give the fee over to EA2 for breaching the TPO code they have subscribed to, even if the other agency is not a member of the TPO but rather the PRS?

And in all seriousness would a judge or ombudsman award a full fee to the agency who only had a phone call with the buyer which led nowhere because they never told us their names and that they had introduced them, and take it off the agency that did the viewing, the sales progression and completed the transaction?

movilogo

In reality, Mr B won't be aware of such rules. If he sees property now being advertised by EA2 (and EA1's ad has disappeared) he is likely to speak with EA2 enticed by reduced price. EA2 may not even know about Mr B's previous viewing - unless seller got a list of names where Mr B showing up and seller informs EA2 about Mr B. 

eddddy

movilogo said:

In reality, Mr B won't be aware of such rules. If he sees property now being advertised by EA2 (and EA1's ad has disappeared) he is likely to speak with EA2 enticed by reduced price. EA2 may not even know about Mr B's previous viewing - unless seller got a list of names where Mr B showing up and seller informs EA2 about Mr B. 

To be fair, the Property Ombudsman has already thought of all the issues you're raising - I suspect they've been involved in the EA business for many years, and know all the potential pitfalls! 

If both EAs follow the Ombudsman's rules, the situation you describe shouldn't arise.

But some EAs don't follow the rules. In that case, the seller should complain to the Property Ombudsman to sort things out.

(However, the PRS is newer and haven't published a set of rules - so the situation is less clear with EAs regulated by the PRS.)




You'd need to read the Property Ombudsman's code of practice in full to see how all the gaps are plugged, but here are some relevant snippets. Look especially at the bold underlined bits:

5u At the time of the termination of the instruction, you must explain clearly in writing any continuing liability the client may have to pay you a commission fee and any circumstances in which the client may otherwise have to pay more than one commission fee. Your explanation must include a list of parties that you have introduced to the property.

5t At the time of receiving instructions from a seller you must:

• point out and explain clearly in your written Terms of Business that you may be entitled to a commission fee if that seller terminates your instruction and a memorandum of sale is issued by another agent to a buyer that you have introduced (see definition of effective introduction (*) and supplementary TPO ‘Dual Fee’ guidance) within 6 months of the date your instruction ended and where a subsequent exchange of contracts takes place. If no other estate agent is involved this time limit extends to 2 years.

• advise that the seller may be liable to pay more than one fee if they instruct another agent during or after the period of your agency.

• ask the seller if they have previously instructed another agent in respect of the property, and if advised yes:

• ask to see a copy of the previous agency agreement to ensure that by instructing you, the seller will not be in breach of contract (note that if the seller is unable or refuses to supply a copy, you must advise, in writing, that you are unable to advise as to whether the seller is in breach of their agreement with the previous agent);

• specifically advise of the possible liability to pay more than one agent;

• establish if an interested party has previously viewed through another agent;

• if an interested party has previously viewed through another agent and makes an offer through you, you must disclose this information and refer the sale back to that agent as they will be deemed to have introduced the buyer (please refer to supplementary TPO ‘Dual Fee’ guidance).

The whole document is here: https://www.tpos.co.uk/images/codes-of-practice/TPOE27-8_Code_of_Practice_for_Residential_Estate_Agents_A4_FINAL.pdf

eddddy

Phantom96 said:

And in all seriousness would a judge or ombudsman award a full fee to the agency who only had a phone call with the buyer which led nowhere because they never told us their names and that they had introduced them, and take it off the agency that did the viewing, the sales progression and completed the transaction?

Firstly, Judges (courts) and The Property Ombudsman deal with cases very differently.

A court would only consider the wording of the contract and the law.  The Property Ombudsman would look at wording of the contract, the law, TPOS code of practice, and fairness to the consumer.

So, as a consumer, you're generally much better off going to TPOS than going to court.


As mentioned previously, the court of appeal has ruled on what constitutes an "Introduction". That is now part of English law. (And, essentially, a single phone call with somebody probably wouldn't be an introduction.)


But bear in mind that an EA doesn't have to make an "Introduction" to charge a fee. They might be able to charge a fee if another agent (or person) makes an "introduction" during their exclusive contract period. (Hence the questions I asked you originally.)

Phantom96

eddddy said:

Phantom96 said:

And in all seriousness would a judge or ombudsman award a full fee to the agency who only had a phone call with the buyer which led nowhere because they never told us their names and that they had introduced them, and take it off the agency that did the viewing, the sales progression and completed the transaction?

Firstly, Judges (courts) and The Property Ombudsman deal with cases very differently.

A court would only consider the wording of the contract and the law.  The Property Ombudsman would look at wording of the contract, the law, TPOS code of practice, and fairness to the consumer.

So, as a consumer, you're generally much better off going to TPOS than going to court.


As mentioned previously, the court of appeal has ruled on what constitutes an "Introduction". That is now part of English law. (And, essentially, a single phone call with somebody probably wouldn't be an introduction.)


But bear in mind that an EA doesn't have to make an "Introduction" to charge a fee. They might be able to charge a fee if another agent (or person) makes an "introduction" during their exclusive contract period. (Hence the questions I asked you originally.)

This is all really helpful, thanks very much. They were on a joint agency agreement and didn't have exclusivity for any period. So hopefully they don't have a leg to stand on.