Workshop on
common causes
of complaint in
sales transactions
What are the
agent’s obligations?
What is a fair and
reasonable
outcome in the
circumstances?
Do I have the right to park?
Consider this scenario…
Mr and Mrs Baker instruct an Agent to market their Property. The Property has a driveway which
the couple currently park on but the kerb outside the driveway is not dropped. The Agent notices
this.
The Agent creates the Sales Particulars and describes the Property as benefitting from “off-road
parking”. Mr and Mrs Baker approve the Sales Particulars and the Property goes on the market.
Mr and Mrs Park-a-Lot view the Property and make an offer which is accepted. After purchasing
and moving into the Property they realise that members of the public often park at the end of
the driveway preventing their access to and from it.
Mr and Mrs Park-a-Lot make the relevant enquiries
and realise that they do not have a legal right to
cross the pavement with a vehicle in order to access
their driveway.
They contact the Agent and complain that they have been misled by the Sales Particulars.
What has the Agent done correctly/incorrectly?
Has the Agent acted in accordance with the
TPO Code of Practice?
Do the Complainants
have a supportable
complaint?
If so, what level of award would you make?
What does the TPO Code of Practice for
Residential Estate Agents say?
Paragraph 7i:
You must by law comply with the Consumer Protection from Unfair Trading
Regulations 2008.
These Regulations require you to disclose any information of which you are aware or
should be aware of in relation to the property in a clear, intelligible and timely fashion
and to take all reasonable steps that all statements that you make about a property,
whether oral, pictorial or written, are accurate and are not misleading.
All material information must be disclosed and there must be no material omissions
which may impact on the average consumer’s transactional decision and where
information is given to potential buyers or their representatives, it must be accurate
and not misleading.
See the TPO Code (August 2014 version) for definitions of material information, average consumer and
transactional decision.
What does the TPO Code of Practice
for Residential Estate Agents say?
Paragraph 7j:
The written details of a property (sales particulars) must be agreed with the seller
to confirm that the details are accurate.
Paragraph 7k:
You will be liable if you include anything in the sales particulars which you have
reason to doubt is correct.
Conclusions…
• The Agent should not have described the property as having “off road
parking” as they were aware that there was no dropped kerb. The lack of a
dropped kerb ought to have put the Agent on notice that there could be
potential problems with parking on the drive. This was a potential breach
of the CPRs.
• The Agent was not entitled to solely rely upon the fact that the seller had
approved the Sales Particulars as a defence.
• The CPRs place an obligation on agents to fully and accurately disclose
information about a property. This is a wider obligation than that which
existed under the Property Misdescription Act (which was repealed on 1
October 2013).
Award…
An approximate award would be around £500 depending on the
circumstances. For example was parking a key selling point for
the Complainants? Did they ask the Agent about the dropped
kerb and were given incorrect information? Had the Agent
marketed the property before and this problem arisen – should
they have known better?
However, the Agent is unlikely to be liable for the cost of
installing a dropped kerb.
What if…
The agent had verbally explained to the
Complainants during the viewing that there
was no dropped kerb and the implications of this?
The Complainants had
viewed the property several times
and parked on the drive?
How else could the agent have explained
the parking situation at the property on the
Sales Particulars?
I can’t do what with my property?
Consider this scenario…
Mr Jones instructs the Agent to market his Property. The
Property is a flat in a block that has a Residential Leasehold
Management Company.
The Agent views the Property, accepts the instruction and produces Sales Particulars
which describe it as being “ideal for investment”. Mr Jones signs these.
Mr Big Bucks, a wealthy landlord, makes an offer for the Property which is accepted
and the conveyancing process gets underway.
It is subsequently discovered by Mr Big Bucks’ solicitor
that there is a restriction in the lease which prevents
the Property from being rented out. It is, therefore,
no longer suitable for Mr Big Bucks. He complains to
the Agent that the Sales Particulars were misleading.
What has the Agent done correctly/incorrectly?
Has the Agent acted in accordance with the
TPO Code of Practice?
Do the Complainants
have a supportable
complaint?
If so, what level of award would you make?
What does the TPO Code of Practice for
Residential Estate Agents say?
Paragraph 7i:
The Consumer Protection from Unfair Trading Regulations 2008 require you to disclose
any information of which you are aware or should be aware of in relation to the
property in a clear, intelligible and timely fashion and to take all reasonable steps that
all statements that you make about a property, whether oral, pictorial or written, are
accurate and are not misleading.
Paragraph 7j:
The written details of a property (sales particulars) must be agreed with the seller to
confirm that the details are accurate.
Paragraph 7k:
You will be liable if you include anything in the sales particulars which you have reason
to doubt is correct.
Conclusions…
•
Agents are not expected to obtain and review title documents prior to putting a
property on the market.
•
However, if an Agent describes a Property in a certain way then they should take
steps to verify that this description is accurate. In this case, the Agent could have
telephoned the Management Company or have asked the Seller if he was
permitted to rent out the Property.
•
Describing the Property in this way without verification was misleading and a
potential breach of the CPRs.
•
The Agent is not entitled to solely rely upon the fact that the Seller had approved
the Sales Particulars as a defence. In this case, the Seller may not have realised the
implications of marketing the Property as ideal for investment.
Award…
In these circumstances it is likely that any costs incurred by Mr
Big Bucks during the conveyancing process would be returned to
him as part of the award.
This is because he would not have even viewed the Property or
made an offer had the Sales Particulars contained accurate
information.
What if…
The Agent is aware that a sale has previously
fallen through due to restrictions on the title of
the property regarding use or another legal
matter that needs resolving but will take time?
Should they disclose this?
The Agent is informed by a third party that
there is an ongoing dispute over one of the
boundaries of the Property.
The Property has a loft extension which the
Seller is using as a 4th bedroom. Should the
Property be described as a four bedroom
property?
CPRs…key points to remember
The obligations placed on Agents under the CPRs are wider than those that previously existed. The days
of “buyer beware” are past.
Description - Don’t describe a Property in a manner that you are unable to verify. If you make a claim
about a Property then you should have taken reasonable steps to ensure it is accurate and have
evidence to back it up, or at least no evidence to the contrary.
Be honest– if viewers are misled by being given incorrect information or by information being withheld
this may initially secure a quicker sale but could also lead to the chain falling apart later on (this does
not benefit the agent or the seller) or an angry new purchaser making a complaint to us or the courts
about the agent.
Get the Seller to approve the Sales Particulars and don’t include anything
in them which you have reason to doubt (even it the Seller is persuasive).
Disclose all material information, especially if you think it will have an effect
on an average consumer’s transactional decision. Put yourself in
the consumer’s shoes – would you want to know?
Can the Buyer afford it?
How available are his assets?
Consider this scenario…
Mr and Mrs Leave-Now instruct an Agent to sell their property. Their daughter is expecting her first child and they
are keen to move up North to live close to her as soon as possible. They have already found a property to
purchase so want to find a buyer who can proceed to exchange of contracts quickly.
Mr Smith views the Property, loves it and makes an offer. The Agent passes this offer to Mr and Mrs Leave-Now
and informs them that Mr Smith is a cash buyer with nothing to sell, as this is what he had informed them.
After some negotiation, Mr and Mrs Leave-Now accept Mr Smith’s offer and solicitors are instructed. The
Memorandum of Sale records that Mr Smith is a cash buyer.
Mr and Mrs Leave-Now immediately instruct their solicitors to carry out searches, instruct a surveyor, and raise
enquiries relating to the property they are purchasing. After they receive the searches and survey results, they ask
their solicitor when he expects exchange of contracts to take place. He informs them that Mr Smith has made his
mortgage application but has not yet received an offer. Mr Smith is subsequently refused a mortgage offer.
Mr and Mrs Leave-Now contact the Agent and complain that they were
given incorrect information regarding Mr Smith’s ability to proceed. They want
the Agent to cover their search costs and their survey and conveyancing fees.
What has the Agent done correctly/incorrectly?
Has the Agent acted in accordance with the
TPO Code of Practice?
Do the Complainants
have a supportable
complaint?
If so, what level of award would you make?
What does the TPO Code of Practice
for Residential Estate Agents say?
Paragraph 10a:
At the time an offer has been made and is being considered by the seller, you must take
reasonable steps to find out from the prospective buyer the source and availability of his funds
for buying the property and pass this information to the seller.
Such information will include whether the prospective buyer needs to sell a property, requires a
mortgage, claims to be a cash buyer, or any combination of these. Such relevant information that
is available should be included in the Memorandum of Sale having regard to the Data Protection
Act 1998.
Paragraph 10b:
You must put all offers to your seller client even if the prospective buyer has not been financially
qualified at that stage.
Paragraph 10c:
These reasonable steps must continue after acceptance of the offer until exchange of contracts
(In Scotland, conclusion of missives) and must include regular monitoring of the prospective
buyer’s progress in achieving the funds required, and reporting such progress to the seller.
Definition of Cash Buyer
Paragraph 18d:
A ‘cash buyer’ can only be described as such if he has realisable cash
assets, that is;
• he has sufficient cash in the bank, building society or other
investments, which can be realised in a reasonable time, that is, it
will be available by the estimated or proposed exchange of
contracts and completion dates; or
• he has actually sold a property, that is he has exchanged contracts
(in Scotland, conclusion of missives) and is expected to achieve
completion on his sale before exchange on his purchase and he
does not require a mortgage to make up any difference in the
purchase price of the new property.
Conclusions…
• The Agent did not take reasonable steps to find out Mr
Smith’s source and availability of funds. They simply took his
word that he was a cash buyer.
• Agents need to take steps to verify the information given to
them by potential buyers. For example, obtain a copy of a
mortgage agreement in principle, or evidence of sufficient
cash assets.
• A Buyer should not be referred to as a cash buyer unless the
Agent has verified the same and they meet the definition.
• If this verification has not been obtained at offer stage then
the offer should still be passed to the Seller but they should
be informed that, although the potential buyer says they are a
cash buyer, it has not yet been verified by the Agent.
Award…
An award for aggravation and inconvenience would be made.
Average £200-£300.
However, generally awards do not cover the loss of legal fees,
search fees and survey costs as the conveyancing process is too
unpredictable and when a Seller accepts an offer they take the
risk that the sale will fall through for whatever reason.
What if…
The potential buyer produces a bank statement
evidencing that he is a cash buyer but
subsequently he decides to use his money to
travel around the world and take out a mortgage
to purchase the property?
The potential buyer thought that his
investments would release more cash to him
then they actually do and he is forced to
take out a mortgage to make up the
shortfall?
The potential buyer is unable to produce
the required information to verify his
status?
Key points to remember…
• Don’t simply accept a potential buyer’s word that they are a cash buyer.
Ask them for evidence of this.
• Do not refer to a potential buyer as a cash buyer unless you have verified
this and they meet the definition in the TPO Code of Practice. Remember
you can tell the Seller that the Buyer claims to be a cash buyer and you are
verifying the situation.
• If a potential buyer requires a mortgage then monitor their progress in
obtaining this and keep the Seller informed.
• Effective and regular communication is
the key to keeping all parties happy
and allows them to make informed decisions.
• Think Money Laundering and stay alert to fraudsters!
When faced with a complaint ask
yourself…
What were my obligations under the
TPO Code of Practice?
Have I acted accordingly?
What is a fair and reasonable
outcome in the circumstances?
Remember the longer a complaint continues the more significant the
aggravation caused. This increases awards in circumstances where the
complaint could have been resolved easily at an earlier stage.
Causes of Complaints
Sales
Two agents claiming a fee
Fixed fee v percentage related to sale
price
Lack of clarity about additional
charges, e.g. withdrawal fee / EPC
Sole Agency / Sole Selling Rights
Financial evaluation
Complaint handling
Causes of Complaints
Lettings
Referencing
Holding Deposits
Tenants damage
Tenants requests for repairs
Pre-contract conditions
Complaints Handling
NOT Tenancy Deposits
Legislation
Existing
• Consumer Protection from Unfair Trading Regulations
2008
Recent
•
•
•
•
ASA Ruling
Enterprise and Regulatory Reform Act
Consumer Contract Regulations
TPO Codes of Practice
Consumer Protection from Unfair Trading
Regulations 2008
Consumer Protection from Unfair Trading
Regulations 2008
Bournemouth Echo 26 Dec 13: A submerged
van in the overflowing River Stour at Ilford
Bridge Home Park, near Bournemouth, where
flooding has caused the evacuation of
residents.
Daily Echo 4 Jan 14: Ilford Bridge after the Christmas
deluge. A total of 90 residents were evacuated from
Iford Bridge Home Park at 4am on Christmas Day as
the River Stour burst its banks and water was entering
the site as they left. They were evacuated again on
Thursday, January 2.
Consumer Protection from Unfair Trading
Regulations 2008
Consumer Protection from Unfair Trading
Regulations 2008
Manchester Blitz
Firefighters putting out a blaze at a
bomb site in Manchester city
centre.
The German Luftwaffe mounted
consecutive attacks on the
Manchester area on the nights of
December 22/23 and 23/24, 1940.
Thank you
The Property Ombudsman
Milford House
43-55 Milford Street
Salisbury
Wiltshire
SP1 2BP
www.tpos.co.uk
Twitter: @TPOmb
Questions?