The dismissal of an estate agent’s claim for a fee by a county court judge came after a very different decision by the Property Ombudsman. TPO yesterday evening said there was ‘ongoing confusion’ about agents’ entitlement to fees.
The new case was brought by Countrywide, trading as Palmer Snell, in Lyme Regis, Dorset.
Palmer Snell were claiming a total of £9,580 including court fees. The actual commission fee the firm was claiming came to £7,935.
The case had its roots in May 2014 when George and Hilary Wood placed their property on the market with Palmer Snell at an asking price of £575,500.
Mr Wood agreed to do all the viewings and carried out 11.
In late August, they were offered a viewing for a Mr and Mrs Luckraft.
But, says Mr Wood: “By this time we had decided to only accept viewings from people who had their property on the market or were able to proceed to purchase.
“Mr and Mrs Luckraft did not meet this criteria. They had two properties to sell but neither were on the market and Palmer Snell were unable to provide a timescale of when their properties would be put up for sale.
“We therefore concluded that at that stage Mr and Mrs Luckraft were not potential or serious buyers so we declined the viewing. Thereafter we received no further communication from Palmer Snell regarding Mr and Mrs Luckraft.
“Nor did Palmer Snell have any further discussions with Mr and Mrs Luckraft after their initial enquiry.”
The Woods subsequently switched agents to Fortnam Smith and Banwell (FSB) where Kevin Hunt advised a price reduction to offers in excess of £525,000.
This was agreed; FSB was appointed, and the agreement with Palmer Snell terminated.
In early October, 2014, FSB requested a viewing for the Luckrafts. The Woods explained that they had previously declined a viewing and gave the reasons why.
However, FSB then said that the Luckrafts’ circumstances had changed. They had a buyer for one home and would put their other home – an apartment in Lyme Regis – on the market with FSB. They were prepared to take out bridging.
Mr Wood said “this significant change in their circumstances” led to a viewing which Mr Hunt carried out.
Mr Wood recalls: “I asked Mr Hunt if Mr and Mrs Luckraft’s viewing would create any issues with Palmer Snell and he advised that because Mr and Mrs Luckraft had not viewed our property and that under the Palmer Snell tenure they had not been ready willing or able purchasers then PS could not claim an introduction.”
The Luckrafts bought the property for £529,000 in February 2015, and the Woods duly paid FSB its commission.
In September that year, the Woods received a request for a payment of £7,935 from a firm called Sinclair Taylor, an estate agency fee-finder business that operates on a no win, no fee basis.
The Woods then met Mr Hunt of FSB, and he advised that they should go to the Property Ombudsman. He cited the Foxtons v Pelkley Bicknell case, where the Court of Appeal had ruled it was not enough to introduce a buyer to a property: to be entitled to commission, the agent had to show it had been the effective cause of the transaction.
The Woods went through the procedure required, first complaining to Countrywide, which rejected their complaint and suggested they approach FSB for a split fee.
The Woods then complained to TPO which rejected their complaint.
Mr Wood says: “We felt that the TPO decision was legally and morally wrong.
“We felt that as consumers it was wrong that we should be expected to pay two fees on the basis of a word introduction which was not clearly defined in the agent’s contract.
“There is clearly no industry definition so estate agents can decide what they want it to mean.”
The couple took legal advice, and their solicitors wrote to Sinclair Taylor saying that, as a matter of law, Countrywide was not entitled to commission.
The lawyers also wrote to TPO and advised them that they had misdirected themselves over the law regarding the term introduction.
Last July, court proceedings were issued against the Woods for non-payment of Palmer Snell’s fee.
In court, Bill Sinclair of Sinclair Taylor represented Countrywide. Also appearing were the Woods, their purchaser Ian Luckraft, and their estate agent Kevin Hunt.
However, Judge Williams swiftly rejected the claim for commission, saying that to claim a fee, the agent must be able to demonstrate that they had introduced the buyer to the purchase, and that an introduction to the property was not enough to claim a fee.
The Woods clearly are thankful that they do not have to pay a second fee.
However, Mr Wood says: “We fought but won at a price. Our legal fees aren’t recoverable because the case was heard in the small claims court.
“However, we feel that if TPO had applied the law in our case, then we would not have acquired these legal fees.”
Countrywide said it could not comment at the present time.
Jane Erskine, deputy ombudsman at TPO, said: “While we cannot comment on the details of a specific case or the reasons why the court came to their decision, not having seen a transcript of the case, TPO seeks to come to a decision on all cases referred to them having considered all the evidence.
“That is the terms of the contract, the agent’s obligations under the TPO Code of Practice and what is fair and reasonable in the circumstances.
“TPO continues to receive comment on the ‘Foxtons case’ concerning an agent’s entitlement to a commission fee. The cases that are brought to TPO reflect ongoing confusion, among both sellers and agents, as to what an agent is required to show to justify their commission fee entitlement.
“If an agent is basing their contractual entitlement to the fee on the fact that they introduced the buyer, the Ombudsman will expect to see documentary evidence that the agent was indeed the ‘effective’ cause of introduction.
“Merely handing property particulars to a prospective buyer, or conducting a viewing where the viewer expressed no interest in the property and did not, at that time, make an offer, will not be considered by the Ombudsman sufficient to establish that the agent’s actions resulted in the sale of the property.
“However, if the agent can provide detailed progress notes showing that the potential buyer was interested in the property and wanted to go ahead but was unable at the time, for whatever reason, but the agent kept in contact, trying to establish the sale, then it is likely that the Ombudsman may conclude that the agent was the effective introducer, even if that buyer subsequently made an offer through another agent.”
Comments (23)
This case shows that the agent, Palmer Snell, had an opportunity to establish when the buyer intended to place their properties on the market. They were asked for clarity by the vendor. Surely a classic case of poor registration / questioning, and understanding of why the buyer was moving and when they intended to do so. This could have been relayed to the vendor and then contact should have remained in place between the agent and the interested buyer. All the time being relayed to the vendor during ‘Vendor Care’. Probably the reason was they were not HOT buyers and so were soon forgotten.
I think if the Luckraft’s had viewed the property the CW may have had a point. However as they could prove no dealings with them, no attempts to get their property on the market or any other contact regarding the people and the property then I think they were trying their luck. Probably (as we all know) because they could really use the money!
I am not happy with the vendor having to pay all their legal costs while the abulance chasing lawyer employed by the agent has much lower legal costs for each case as they treating it as a large-scale operation hoping that at least some people will pay up to avoid the stress of a court case.
Estate agents cannot expect to have any respect from the public when they try to pull this sort of trick clearly a vendor should only have to pay once for each sale and if the agents disagree over who should get the money that should be for them agents to decide between each other. If the industry self regulation bodies cannot make this happen then maybe the law needs changing.
I am about to remortgage a property and was thinking of using a countrywide mortgage broker this case has just made up my mind not to touch them with a barge pole.
How many agents inform the vendor of the names of potential buyers before viewings take place?
Companies such as Sinclair Taylor provide a useful service in helping to claim back fees from cheating vendors often without the original selling agents knowledge by in some cases cross referencing the land registry completions with withdrawn stock over say a 12 month period you may be surprised to learn just how many ” we have decided not to sell but thanks awfully for your help ” etc. etc. do a private deal with a buyer sometimes because they are unhappy with their agent and think they wont get caught if they keep quiet. Can anyone honestly say they have never come across this and wouldn’t you like to get paid? As for Bill Sinclair and Tom Harris to call them ‘ ambulance chasers ‘ is indeed well wide of the mark and having met them both professionally over the years i can assure you they are both decent people. This particular case however is troubling in so much that if the TPO had seemingly done their job correctly in the first place by kicking it out i am certain that CW would have not pursued their claim no doubt on Sinclair Taylors advice not to do so.
I am literally gobsmacked that this made its way to court.
Firstly its laughable that Countrywide believed that just giving a client the details and trying to book a viewing is good enough to claim a fee, not alone a £7,935. Secondly for the TPO to dismiss the clients case makes a mockery of their existence.
This case was clear as it could be from the outset. If you want to claim a fee you as a minimum need to view the property with a client and in my opinion they need to offer..
TPO = Tin Pot Organisation!
When you lose the listing write a letter to the Vendor and new agent stating the names of all perspective buyers you claim to have introduced during your agency agreement! Nice a clear for everyone and pretty transparent!
“Sinclair Taylor, an estate agency fee-finder business that operates on a no win, no fee basis.”
These sort of “ambulance-chasing” operators leave a bad taste and do nothing for the reputation of EA.
On the other hand:
Sinclair Taylor are a very reputable company – one of their directors was a TPoS board member (according to the Bio on their website).
In my opinion this case wasn’t even up for debate, Palmer Snell did not arrange the eventual viewing so were not entitled to a fee and were simply chancing their arm.
What I think is more worrying is a supposed regulator of Estate Agency in TPO not frankly understanding something to many seem plainly obvious.
If you’re going to regulate an industry surely you have to understand it and consult legal council on your decisions otherwise its the equivalent of simply asking my nan for an opinion.
“However, if the agent can provide detailed progress notes showing that the potential buyer was interested in the property and wanted to go ahead but was unable at the time, for whatever reason, but the agent kept in contact, trying to establish the sale, then it is likely that the Ombudsman may conclude that the agent was the effective introducer, even if that buyer subsequently made an offer through another agent.”
I find the TPO statement troubling. What constitutes ‘trying to establish the sale’?
I took it as trying to get their property on the market (preferably with themselves or another agent) and managing the price of the buyers property to get them in a position to sell. As well as updating the seller that ” Mr/s X are having quite a few viewings over the weekend, are you sure they can’t pop round to yours in the next couple of days?” (assuming it’s true obvs!)
The case could have spun further. Looking at the judgement and the fact price was substantially reduced later in marketing – CW lucky the defendants didnt also counter claim over valuation to market.
Points of law and changes in circumstance.
Estate agency as a business is becoming more of a war zone, especially looking at mickey mouse fees being charged.
Having read all the comments on this and last nights story, is anyone aware of what can be included in a contract to cover the situation where someone knocks the door of an advertised property (even if there is no board up the property is identified from the picture) and tries to negotiate with the owner to exclude us?
For many other agents it might only happen rarely, but it seems to be increasing for us. We have one vendor who is currently claiming he has four offers from private buyers that are friends of his family!
Unless your contract states sole selling rights, you wont be able to claim a fee here. If someone you have no knowledge of knocks the owners door and negotiates privately then you have no hope of getting your fee.
In my opinion some of these situations boil down to how an agents relationship with the vendor is, and what type of person said vendor is. I’ve had door knocking situations where vendor has taken the viewers details and just handed it over to me. They dont want the hassle etc.
Sorry ArthurHouse02, dont agree. If someone knocks the door because theyve seen a board then that is an introduction by the agent, and I’ll let the forum argue as to whether its direct or indirect, otherwise dont ever put a board up. Apart from family members and people the vendor has spoken to prior to instructing you, whose names should be noted on the agency agreement and therefore excluded as being introduced by the agent, there is no such thing as a private buyer as far as Im concerned. However, I totally agree that if you have the right relationship with your clients it will never be a problem.
Under a Sole Agency Agreement, no it isn’t classed as an introduction Paulfromromsey87. A sole agency is as it sounds – a sole agency, meaning that if another agent sells the property during your contract term then you are entitled to a fee. It does not cover a private introduction, regardless of what wording you have in your contract. A sole selling rights agreement would have meant that the agent was entitled to a fee as that would cover the property being sold by any means during the contract term. CW were having a laugh trying to claim a fee in this case and should be ashamed of themselves.
Totally agree sanctuary45 that CW should be ashamed of themselves. Whoever took the decision to sue the vendor should be sacked as they had absolutely no claim to a fee.
However, if someone sees your board on a property and knocks the door then you have introduced that person to the property without question regardless of your agreement being sole agency or sole selling rights, and I know the difference having used both with different agents (no offence taken by the way). If you’re suggesting that a board doesn’t constitute an introduction then heaven help us because the day a court decides you’re right we’ll never see a For Sale board outside a house again.
I think TPO were wrong here and should pay the Woods compensation to cover their legal costs.
The problem with every industry redress scheme is that they tend to be influenced by corporate members, who will always try and set the rules to favour their own interests, with no regard for what the moral majority believe.
An expensive lesson for both parties although a moral victory for the seller in question. It’s no wonder consumers are attracted to the many hybrid models in terms of fee payments. For the consumer they appear to be more transparent in terms of I get what I pay for and decision making is in the hands of the seller. Clearer definitions and transparency is required from many agents if they are going to survive.
Seemingly as it was a failure of the redress process that required the court action perhaps TPO should consider reimbursing the Woods the cost they incurred.
Agreed, especially as the Deputy Ombudsman’s quote above confirms that to have any chance of a legitimate claim an agent will have to do everything that CW didn’t.
Can’t believe CW took this to court. Was never a chance to win based on circumstances and time passed. Don’t think it creates any confusion really. Quite clear cut. The buyers weren’t buyers at the time CW tried to introduce them. But they became buyers well after CW lost their instructions.
Another waste of much needed money for CW
Surely the problem is this:
“In September that year, the Woods received a request for a payment of £7,935 from a firm called Sinclair Taylor, an estate agency fee-finder business that operates on a no win, no fee basis.”
It didn’t cost Countrywide a penny to try an bully their former client – why wouldn’t they give it a go?
The interesting question really has to be whether or not the evil people at Sinclair Taylor will waster their own money again trying to take other people to court in such a manner…