The Property Ombudman is issuing new guidance to agents on dual fees.
Essentially, firms will be able to charge a fee as long as they have shown the eventual buyer around the property less than six months before they, as the first agent, were disinstructed.
The new TPO ruling appears to be an interpretation of case law in the courts, where agents can no longer charge a commission for introducing a buyer: instead they must prove they have introduced a buyer to the actual sale.
TPO now appears to be saying that a viewing proves that vital introduction to the sale. However, the viewing must be logged and have actually taken place, with records proving vital.
TPO says dual fees are a growing problem where sellers are charged commission by two sets of agents.
In 2017, TPO received 32 cases relating to dual commission fees, in 2018 there were 72 cases, and so far this year TPO has already received 25 cases.
TPO says there are two usual scenarios.
The first is where an agent is instructed on a sole agency or sole agency rights basis, then is disinstructed and a second agent instructed.
The second is where both agents are instructed on a multi-agency basis.
TPO said: “To provide clarity and certainty to both industry and consumers, there is a need to define what will constitute an effective introduction; the current lack of clarity in this area and lack of definition of introduction is at the root of the disputes.
“The disputes reflect poorly on the industry and lead to consumer distress.
“TPO has taken on board feedback from agents who consider that sharing a fee allows the second agent to ‘take a punt’ and, instead of referring a sale back, continue with the sale in the hope of receiving at least part of the fee.
“TPO’s view is that in dual fee cases the agent who effectively introduced the buyer should be the agent who is entitled to the fee.”
Importantly, says TPO, an ‘effective introduction’ is best evidenced by an agent carrying out a viewing.
TPO says that in deciding complaints, it will look for evidence that a viewing has been booked, confirmed in writing to both seller and buyer and taken place.
A viewing more than six months prior to disinstruction without evidence of continuity of interest will not be deemed an effective introduction by the first agent to any subsequent sale post disinstruction.
The new guidance issued by TPO outlines agent obligations upon disinstruction, including disclosing to the seller a list of parties that they have introduced, i.e. a list of those who have viewed the property.
If the seller signed a sole selling rights agreement, the agent must advise the seller on disinstruction, in writing, that a fee will be due if any party who was introduced during the sole selling rights period proceeds to exchange of contracts.
TPO said that it considers all agents have a specific responsibility NOT to put a consumer at risk of paying two fees and have therefore also outlined the obligations of the second agent upon instruction.
The guidance states that all agents should keep full written records.
Ombudsman Katrine Sporle said: “If a dual fee complaint is referred to TPO, we will be looking to address any consumer detriment. Our stance is that no consumer should unknowingly be placed in a position of paying more than one commission fee.
“TPO will reach a conclusion against the requirements of the Code of Practice and associated TPO Guidance, having taken into account the contractual entitlement of the agent under the terms of the agreement signed by the consumer.
“To establish an effective introduction, there must be a viewing of the property.”
TPO awards are limited to £25,000 (see also EYE’s story today).
If the commission fee in dispute is greater than £25,000, TPO said that the matter may, with the agreement of all parties, be referred to TPO’s associated mediation service, the Mediator Network: http://www.mediatornetwork.org/tpo-services
Michael Stoop, chair of TPO industry forum, said: “Disputes over dual fees have become an increasing cause for concern.
“It is clear that in many cases consumers are not aware of the risk. TPO’s guidance and revised Codes of Practice outline the key issue of what constitutes ‘effective instruction’.
“It also defines the responsibility of the first agent to provide the seller with the list of viewers, and the second agent to advise the seller of the risk of a dual fee.
“Through the industry forum, the guidance has full backing and is considered best practice.”
Comments (19)
I think consumers should read the contracts they sign rather than expecting us to become their legal council and explain the risks of them not understanding their contract … It’s basic common sense.
My understanding it is who is instrumental of the sale of the property.
So say, first viewing with agent at one price, discounted.
Two months later, agent disinstructed as not sold, another agents lists property at £25,000 less, buyer sees this online, returns, views, offers, agent negotiates sale.
To my mind agent two is the one who is instrumental in the sale and therefore entitled to the fee.
Strongly disagree!
So, 1st Agent does a Viewing, fails to sell, is dis-instructed then hangs about hoping for a fee under TPO Guidelines?
I think if I am the 2nd Agent and use my skill & expertise to sell a particular property, which another agent failed to sell (different in Scotland please remember) then waltzing up afterwards and saying “we showed them 1st” doesn’t trigger “ok, here’s your fee!”.
Case by Case basis. As a former Police Officer I had the Law & Common Sense and applied them both on many occasions, even a drunk driver who had climbed into the back seat of his car to sleep off his hangover and not drive home from the bowling club. Law says “drunk in charge of a vehicle” ……common sense says “climbed into back of his car with car keys in his pocket at midnight, was found at 4.30am sound asleep, he didn’t drive or attempt to drive, I woke him up, warned him, took his keys back to the Police Office, which he collected later that day”. So, I could have ruined his near future however I chose Common Sense.
Case by Case basis, no question, That the TPO have such a small number of cases to deal with? …… they have time to assess each case.
Chr*st on a Bike! ……is this really where we are at now?
‘In 2017, TPO received 32 cases relating to dual commission fees, in 2018 there were 72 cases, and so far this year TPO has already received 25 cases.’
Really, I wonder how many of the 5000 or so emoov V1 customers will have to pay two agency fees?
Have 10,000s of PB customers already had to pay two agency fees?
Does this not ‘reflect poorly on the industry and lead to consumer distress’?
Come on TPO get your act together as there is already a rampaging bull in the china shop damaging around half the goods that you are doing nothing about?
So if you hand over a fee up front to the agent, never have a viewing and then disinstruct them… Do you get your money back? Will TPO support a vendor in claiming up front fees back?
Up-front Fees with No Sale achieved are the next “Mis-Selling” Scandal just waiting to explode on the scene….. give it a few years ….Tick Tock, PB and others
Remind me again ……as a prospective Homeseller, if I choose the up-front Fake Agents to sell my home, they (the Fake Agent/s) claim they are just like an Estate Agent? …..however if they don’t sell my home I have then paid for a service which I never actually received? ……and the TPO Guidelines on this practice are what exactly?
What does it cost me to sell?
Five star service for a fair fixed fee of £899
It doesn’t matter what the TPO think – the website advertising is clear and you would expect unhappy clients to have a legitimate claim in a court of law?
The PPI ambulance chasers will have a ready source of income for a few more years.
In my view primary introducer gets the fee providing you have enough evidence to prove it.
TPO and other redress schemes in my opinion do whatever is easier for them to resolve the situation.
If a fee was in dispute I wouldn’t allow it to go these redress schemes. I would take it straight to court, that way the redress scheme can’t take the case on.
Typical fence sitting and without a definitive answer or solution!
there seems by TPO’s admission, no timescale to this as they say, (apart from the ifs and shoulds) “a viewing more than 6 months from disinstruction and prior to a sale with shortcomings on evidence wont be considered” this means a claim is still open ended on timescales and this is effectively after a 3 month agency plus a 2-4 week disinstruction notice period plus the minimum 6 months means a claim is live for at least 9.5-10 months with evidence of course, so TPO have cleared that one up then!!
Will be interesting to see this get tested in Court.
TPO membership rules are mainly about good practice and what is morally right. Having gone through their complaints process numberous times (for lettings), that appears to be the apporach in the final decision.
This seems crazy ? Before it was the agent who actually put the sale together ie did all the negotiating (where the money is actually earned!!) who was paid – now you just need to show round as many people as possible ???
It is for us to be mindful of those vendors who dont want viewing from people who havent sold yet or arent on the market. It is those people you will buy the property at a later date if the vendor changes agent. So yes, do as many viewings as possible….quantity rather than quality is the winner it seems.
Um, isnt providing the vendor with a list of people who have viewed the property a breach of GDPR?
You would hope not?
Hi Vendor we have a viewing for you tomorrow night.
Fab who is it? we will be in at 7pm and would love to show them around.
Not telling you Vendor… can’t tell you vendor… We shall call them Mr & Mrs Viewer 2 to avoid GDPR.
But no doubt someone will tell me we should have a note on our viewing confirmations stating; by requesting to view this property you consent to us giving your name to the vendor and details of your ability to buy.
Surely saying “Mr & Mrs Smith” and “Mr Jones” on a log is NOT a breach?
Legitimate use, GDPR is a red herring.
…any more than the name of someone who makes an offer? If in doubt, agents just need to disclose this use of data to the viewers (when they register) and also the regulator, I suppose.