The Guild of Property Professionals has issued a fresh reminder for agents regarding disputes over dual fees.
The issue The Guild looks at is when sellers move agents and the new agent successfully introduces a buyer to the property fairly quickly.
In this situation, The Guild says that it is likely that the seller would then receive communication from their original agent claiming that the buyer was first introduced by them, and therefore they will be claiming a fee in accordance with the terms they had in place at the time.
Meanwhile, the new agent would also be looking to claim a fee, putting the vendor in a position of having to pay two fees.
Paul Offley, compliance officer at The Guild of Property Professionals, says that he often has estate agents contacting him with regard to vendor’s concerns around the matter of dual fees. He adds that there are a few things that estate agents can do help protect their vendors.
According to Offley, the topic was further clarified around 18 months ago when The Property Ombudsman and National Trading Standards issued guidance on what an ‘introduction’ was. This has defined the introduction as the agent who arranges the first viewing, confirms the viewing in writing and where the viewing has taken place.
He continues that if a property is withdrawn from an agent, it is important for them to write to the seller at the point of withdrawn and list every single person that has viewed the property through their agency and to clarify any future fee liability should one of these people go on to purchase the property within agreed time periods from the point of withdrawal.
Offley explains: “What are the agreed time periods? If another agent is used then the time period is six months, starting from the date the agreement with the first agent terminated. If no other agent is instructed then the period extends to two years. This is clearly documented in the TPO Code of Practice.”
He adds that if your business is the agency that is taking on a property that has been on the market with another agent, as the new agent you should ask the vendor whether they have received a letter from the previous agent or have a list of people who have viewed.
He added: “Having that letter in place will avoid any confusion and will make it clear as to where the buyer of the property came from. In the case where one of the people on the list came back and would like to make an offer, even if you are currently the new agent marketing the property, the sale should be referred back to the first agent as the introducing agent.
“It doesn’t matter if agent one put the property on the market for £200,000 more than it’s worth and agent two put it on the market for a more realistic price, which ultimately resulted in the buyer returning. In accordance with TPO guidance it remains the agent who arranged the first viewing that would be defined as the introducing agent.”
In conclusion, Offley says that if the process is followed, there is complete transparency between all parties and the seller is being protected from a possible dual fee situation.
Dear Author. Thank you for confirming what had already been confirmed by TPO and National Trading Standards around 18 months ago.
I am sure this is helpful for people who either missed the guidance or who have been cryogenically frozen for 18 months.
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How much is this guy paid? I was told this ruling as a trainee when I started in the industry 20 years ago? It’s hardly a revelation…..
Still, the market is flying at the moment, so we can expect a flurry of ‘Property Experts’ to start chipping in, as always happens when the market is good.
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And yet so many agents continue to either flaunt the rules or continue in ignorance.
Free advice which comes at no cost or detriment to you or anyone else. Keep scrolling..
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This is a load of rubbish; as I have said before I would challenge the TPO “guidance” in court if I needed to.
There have been two cases in the high court. Both in London. The judgement was clear –
To claim a fee you have to introduce a buyer to a purchase. Ie it has to be in solicitors hands. Unfortunately this bleating of “I sent Mr Bloggs a brochure on 2nd April, so i introduced him” is NONSENSE.
if you’ve shown a buyer round they have agreed to buy it and it’s in solicitors hands then you have introduced them to a purchase.
If you showed them round once you have not introduced them to a purchase…
In any other case you are not due a fee and the new agent gets the monies.
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And this is where TPOS Code varies from case law. TPOS were challenged on this when they introduced it but have not sought to bring their Code in line with those cases. But an Agent who is a TPOS member agrees to act in accordance with the Code so doesn’t leave much room for taking a flyer and hoping it goes to court rather than TPOS. Clear as mud!
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I’m inclined to agree. The legal precedent is clearly effective cause. There appears to be inconsistency in TPO interpretation, however. I have been involved in a case of agreeing a sale (including instructing solicitors) that subsequently fell through, later being dis-instructed only to find the same buyer had completed (within six months) through another agent and then only getting a small percentage of the fee after TPO intervention. Has anyone ever challenged TPO in court? I imagine their rules prevent this.
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Absolutely right there is case law which defines who ‘introduced’ and must be instrumental in the sale. The ‘First to View’ was also thrown out as being always the case for a claim. Stopped the telephone book syndrome by some unscrupulous agents.
This situation shouldn’t arise if agents used the correct agency agreement. Often signed up on a ‘sole agency’ and not addressed correctly when the property is switched to a joint or multiple agency. The biggest scam is the original agent introducing, viewed, may even have had a sale agreed but for some reason failed to complete (chain collapse) and the vendor switches to another agent but the original buyer is stolen by the new agent, instead of sending them back to the original agent within the 6 month period when they did nothing.
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Mmmmm an industry advisor !
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Yes, Paul Offley is a good one as well
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Case law will always triumph in court.
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Absolutely. It’s a joke that TPOS and The Guild continue to peddle this rubbish when the precedent in court is that the agent that provides an effective introduction. Why they keep churning these articles out is beyond me.
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I hate to sound ignorant, but what is this six months lark you’re all talking about? I don’t have that in my terms!
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