In a case which could have major implications for estate agents, a court has decided that a vendor did not have to pay a fee after his agents allegedly failed to tell him they were selling a flat across the road for almost £50,000 more.
The story, reported in yesterday’s Sunday Times, centres around a case brought by major London agent Kinleigh Folkard & Hayward against a vendor named as barrister Mangal Kapoor.
He allegedly declined to pay the firm for selling his flat in Fulham for £450,000. He argued that KFH had failed to tell him it was selling a flat over the road at the same time for £499,000.
The paper quotes him as saying that the first he knew of this was when the Sold board went up.
He said: “If I had known they had exchanged on a smaller property for almost £50,000 more than mine, I would not have sold for the price I did.”
The judge, at Kingston upon Thames County Court, found that the agent was not entitled to recover its commission because there was “sufficient evidence to find that the claimant [KFH] had not disclosed the sale of a neighbouring property at a higher price”.
KFH this morning told us that it will be appealing.
Difficult to make any comment on this without the full facts , There could be all sorts of reasons why the flat across the road sold for more or less -aspect,orientation ,service charges, neighbours , condition ,leasehold conditions ,special purchaser -the list is endless
The other side of the street can be so far across the tracks you can’t hear the train whistle
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oh dear… move over the founders of “holiday-sickness.com” and enter “did-you-sell-for-less-than-your-neighbour.com”
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Lets hear the facts, but if my memory serves me correctly, about 10 years or so ago, the same happened again in London, and it involved John D Wood. They lost as it was their duty to inform the client of all evidence in the market, that client claimed a financial loss as a result of not being informed of all competition in the area he lived! We all know that markets are imperfect…they are determined by people and their idiosyncrasies! This does show a risk.
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Does the judge in question hand out exactly the same sentence when dealing with people who commit the same kind of crime? I doubt it because every case will be different, as is every property sale.
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How many viewings and how many other offers prior to sale STC?
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What isn’t explained here is exactly why selling a neighbouring property for more denies the agent their fee? The law doesn’t state that we have to sell properties for exactly the same price. If it is purely that the agent didnt inform the vendor about the property across the road….at what point in the sale was this, had he already exchanged? If not then he had the option to withdraw from the sale. If he chose not to then he made the decision to proceed knowing the facts.
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I wonder if this is about CPR, with the undisclosed fact affecting the ‘transactional decision’ on the part of the vendor? Sets a worrying precedent if it is. Let’s hope KFH can shed light for us.
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Begs the question if KFH had a duty to disclose to the purchaser of the more expensive property that a larger property across the road is only selling for £450.000.
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Many factors at play potentially here and, as has been said, difficult to comment without the full facts however IF (and it’s a big IF) KFH neglected to use due diligence when supplying comparable evidence at the time of appraisal as required under good practice and TPO code etc, then this could have ramifications for firms who rely on AVM models and don’t use proper research when listing. In all reality though, this will be an isolated incident. Useful for case law for the few but failing to protect the many.
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I wonder whether the vendor in question had only the KFH opinion as to value? That would be a difficult one to believe. Even in Dustrict Court, although you are not always ‘sworn in’, you are deemed to be under oath. The obligation on a Barrister would be commensurate with their standing as ‘officers of the court’ when it comes to matters of disclosure.
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Surely there is also an element of “confidentiality” about disclosing information about other people’s houses. Some people don’t want a board up, so often the first someone knows is when the sold sign goes up. As other replies state, there may have been a number of reasons, it could be that at the end of the day, its a better house, afterall the viewers chose to buy the more expensive one that the cheaper one? Why was that? So its rubbish really. There are no guarantees what houses will sell for. Beauty is in the eye of the beholder and the surveyor and market forces. Just because a property was marketed at £50,000 more doesn’t mean it achieved that much more either.
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“Some people don’t want a board up, so often the first someone knows is when the sold sign goes up”
Which, as we all know is illegal; can’t have a sold board without a for sale board first. Expreme comeuppance!
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Eh?!
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I didn’t know that. When did that happen?
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It’s a technical planning issue but correct. If you only erect a sold board it is a technical breach of the Town and Country Planning Act as the board is an advertisement of a business and not notification of a sale for CPR purposes. Nerd hat on 😉
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Are LET boards also illegal?
Given that the tenant has signed a contract you would hope so – but it doesn’t seem to stop agents putting them up.
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Can someone please post a link to the court’s judgment?
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Is the claimant now going to instigate a claim for negligence? One would have thought that the fee is significantly less that the £50k that he accepted for his flat notwithstanding that the lower priced flat was larger. Unless that is, in the absence of greater detail, this was a District Judge of limited experience being influenced by a Barrister of greater ‘gravitas’? I have experienced a similar ‘miscarriage’ at the hands of DJ where the only option was to appeal the decision. The end result was a Circuit Judge overruling the DJ and admonishing them for their ‘unjust’ decision.
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I think KFH should immediately appeal with the help of the NAEA to get this overturned. This has tremendous ramifications on our industry for NO fault of our own. It MUST be fought.
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NAEA won’t get involved with this.
There is existing case law which will provide guidance on cases like this. Establishing new precedent is expensive so unless KFH have a cast iron case it won’t happen.
Just seen the updated story, it seems they feel they do.
I’ve had a look at the data for flats in SW6, a key to who wins this case will be what was happening in the market at the time.
Supply and demand is a fickle thing so although the barrister has only his time to lose he could waste more than its worth to fight this. Most normal vendors don’t have the luxurty of dealing with “sorry the applicant preferred another property” through the courts.
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Strange outcome. Very difficult to know what to make of this without facts; there could have been myriad differences between the two flats; the decorative condition, layout, fixtures and fittings, age etc.
Unless they were virtually identical I’d always assume there were going to be variances in pricing across houses/flats in the same location, therefore proving any wrongdoing here would ostensibly seem to be difficult.
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Too many variables to comment really – e.g. was the £450k sale subject to a mortgage, and therefore a mortgage valuation? The £500k purchase could have been cash and therefore free from any valuation restraints.
However scary situation. Would the agent be in trouble if they had disclosed the higher price to the £450k vendor, he then cancelled the existing sale and then didn’t sell at a higher price!!?? He would probably have sued them for losing the original buyer.
I’m off to change our agency agreement!!
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County Court Decision, so not binding on others courts, and as others have alluded too, not enough detail to even understand the implications or on what basis the judge has made such a decision
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Until the full details of this can be analysed, the reasons are just pure speculation. However, I will speculate it’s because the vendor is a barrister and knew his way round every law/regulation etc etc. I hope the agent appeals the case.
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Judges have been known to get things wrong….
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As my ‘pet Barrister’ says…
“You don’t get justice in Court – you get a verdict”.
How true…
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Agree NAEA and perhaps Property Ombudsman could get involved. We don’t know the facts but there are endless reasons why a seemingly similar property could sell for 10% more or less than another. I see it quite often. I always follow TPO guideline of leaving behind written comparable evidence with a client when doing the MA (although sometimes they get handed back or a client just states their price). I also state that I give written advice but final pricing is down to the owner of the property.
Perhaps there is some critical info we don’t yet know, but it strikes me that telling one client about another client’s negotiations before at least Exchange of contracts could kybosh one deal or the other and get at least one client justifiably furious. I’d feel uncomfortable being specific until Completion.
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I’m guessing he wouldn’t have quibbled if he had pocketed more money for his flat than another, larger, better flat across the road sold for…
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There are so many variables to this story. Who listed first? What is the reason that the smaller one was on for more money? The fact that the smaller, more expensive sold first, means that there is a reason for it.
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I don’t think KFH should have allowed the defence of the vendor to use the flat over the road sold for £50K more as valid.
I sold a property for £280K and over a year later a similar one just sold through haarts for £215K.
The condition isn’t as good but all the same it ain’t that bad.
the point is, haarts marketed the property, introduced a buyer, negotiated the sale, followed through to completion and are therefore due a fee for doing their job, if they didn’t tell the vendor a similar one sold for £65K a year earlier, is it relevant ?
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Erm…
Am I the only person to have searched the Barrister’s Register and not found anyone by the name of ‘Mangal Kapoor’?
barstandardsboard.org.uk/regulatory-requirements/the-barristers’-register/
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https://beta.companieshouse.gov.uk/officers/lMT_khfH6jWfFTlUl3sugp3L31I/appointments
Might this be the chap?
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One and the same, it appears!
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