Sole agency vs sole selling rights - has my agent got it wrong?

2210danni

We are in the process of selling our home and have signed a 12 week sole agency agreement. 

A friend of mine has introduced me to someone who may be interested in purchasing - under a usual sole agency agreement, as the buyer has had no involvement with the agent, they would not be entitled to their fee/commission. However, having checked our contract, they have added a clause that states they we are liable to pay their fee:

Or, if sole agency is selected, with a purchaser introduced by any other agency or person.


In my (fairly limited) knowledge of property, this clause would mean we are actually in a sole selling rights agreement, rather than sole agency. But as they have specifically defined it as sole agency, can this clause actually stand? 

Grateful for any advice from someone with a more property legal head! 

Thanks in advance 

eddddy

My understanding is that if an Estate Agent uses the term "Sole Agency", it's meaning is defined in law. The Estate Agent cannot change the legal definition. So it sounds like your Estate Agent might be breaking the law.

(If the Estate Agent is a member of the Property Ombudsman scheme, the Ombudsman also makes that very clear.)





Firstly, some extracts from the law (The Estate Agents (Provision of Information) Regulations 1991) ....

Explanation of terms concerning client’s liability to pay remuneration to an estate agent

5.—(1) If any of the terms“sole selling rights”,“sole agency” and“ready, willing and able purchaser” are used by an estate agent in the course of carrying out estateagency work, he shall explain the intention and effect of those terms tohis client in the manner described respectively below, that is tosay—

(a)“sole selling rights”, by means of a written explanation having the form and content ofthe statement set out in paragraph (a) of the Schedule to these Regulations;

(b)“sole agency”, by means of a written explanation having the form and content ofthe statement set out in paragraph (b) of the Schedule to these Regulations; and

(c) “ready, willing and able purchaser”, by means of a written explanation having the form and content ofthe statement set out in paragraph (c) of the Schedule to these Regulations: 

link: https://www.legislation.gov.uk/uksi/1991/859/regulation/5/made

And here is paragraph (b) of the Schedule:

b) Sole agency

“SOLE AGENCY

You will be liable to pay remuneration to us, in addition to any other costs or charges agreed, if at any time [unconditional contracts for the sale of the property are exchanged] —

• with a purchaser introduced by us during the period of our sole agency or with whom we had negotiations about the property during thatperiod; or
• 
  
• with a purchaser introduced by another agent during that period.”

Link: https://www.legislation.gov.uk/uksi/1991/859/schedule/made

And the Property Ombudsman says:

5i  Your Terms of Business should be written in plain and intelligible language. In particular you must use in your Terms of Business the specific definitions in the Estate Agents (Provision of Information) Regulations 1991. You must take particular care for example in defining and distinguishing between ‘sole agency’ and ‘sole selling rights’; and in describing a ‘ready, willing and able’ contract. You must use the relevant definitions in full, display them prominently and clearly explain the implications of the terms to your client, especially where multiple definitions are used.

Link: https://www.tpos.co.uk/images/codes-of-practice/TPOE27-8_Code_of_Practice_for_Residential_Estate_Agents_A4_FINAL.pdf

2210danni

eddddy said:

My understanding is that if an Estate Agent uses the term "Sole Agency", it's meaning is defined in law. The Estate Agent cannot change the legal definition. So it sounds like your Estate Agent might be breaking the law.

(If the Estate Agent is a member of the Property Ombudsman scheme, the Ombudsman also makes that very clear.)





Firstly, some extracts from the law (The Estate Agents (Provision of Information) Regulations 1991) ....

Explanation of terms concerning client’s liability to pay remuneration to an estate agent

5.—(1) If any of the terms“sole selling rights”,“sole agency” and“ready, willing and able purchaser” are used by an estate agent in the course of carrying out estateagency work, he shall explain the intention and effect of those terms tohis client in the manner described respectively below, that is tosay—

(a)“sole selling rights”, by means of a written explanation having the form and content ofthe statement set out in paragraph (a) of the Schedule to these Regulations;

(b)“sole agency”, by means of a written explanation having the form and content ofthe statement set out in paragraph (b) of the Schedule to these Regulations; and

(c) “ready, willing and able purchaser”, by means of a written explanation having the form and content ofthe statement set out in paragraph (c) of the Schedule to these Regulations: 

And here is paragraph (b) of the Schedule:

b) Sole agency

“SOLE AGENCY

You will be liable to pay remuneration to us, in addition to any other costs or charges agreed, if at any time [unconditional contracts for the sale of the property are exchanged] —

• with a purchaser introduced by us during the period of our sole agency or with whom we had negotiations about the property during thatperiod; or
• 
  
• with a purchaser introduced by another agent during that period.”

And the Property Ombudsman says:

5i  Your Terms of Business should be written in plain and intelligible language. In particular you must use in your Terms of Business the specific definitions in the Estate Agents (Provision of Information) Regulations 1991. You must take particular care for example in defining and distinguishing between ‘sole agency’ and ‘sole selling rights’; and in describing a ‘ready, willing and able’ contract. You must use the relevant definitions in full, display them prominently and clearly explain the implications of the terms to your client, especially where multiple definitions are used.

This is excellent information, thanks very much. I can go into the scenario feeling much more confident we will likely win a case if they try and bring one against us. In the meantime, I’ll contact the Ombudsman to see if I can get further clarification in this particular circumstance. Thanks again 👍🏼

eddddy

2210danni said:

This is excellent information, thanks very much. I can go into the scenario feeling much more confident we will likely win a case if they try and bring one against us. 

Assuming the Estate Agent is a member of the Property Ombudsman Scheme, and the Estate Agent sends you a bill - you'd be better off complaining to the Property Ombudsman, instead of waiting to see if the Estate Agent takes you to court.

The Property Ombudsman is more biased towards consumers than a court would be.


For example, a court would only look at the contract you signed (and the law).  But the Property Ombudsman would look at their Code of Practice as well - which generally imposes tougher rules on the Estate Agent, and gives the consumer more rights.