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Property Ombudsman issues guidance over dual estate agents fees

Disputes over Dual Fees, where two estate agents have been instructed and both are claiming a fee for selling a property, have always been a regular cause of complaint to

The Property Ombudsman has issued guidance on dual fees where two estate agents have been instructed and both are claiming a fee for selling a property, an issue that is a regular source of complaints.

Indeed, the number of complaints have increased with figures form TPO showing it received 32 cases relating to dual commission fees in 2017 and this rose to 72 in 2018, while so far in 2019, it has already received 25 cases.

Other industry representatives have shared concerns about the rise in complaints and as well as issuing clear guidance for estate agents, the TPO said it will update codes of practice too.

TPO says that to provide clarity and certainty to both industry and consumers, there is a need to define what will constitute an effective introduction and 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 so 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 and that an effective introduction must evidence that the agent carried out an act that initiated the buyer’s reaction to the property.

As such, there is a need for a defined transaction event to occur. It is TPO’s view that this can be most clearly evidenced by an agent carrying out a viewing.

When considering if an agent has introduced the buyer, TPO expects to see evidence that the viewing has been booked, confirmed in writing to both seller and buyer and taken place. In this way, TPO will be in a position to state that, following the viewing, the agent that conducted the viewing introduced the buyer.

It also says that a viewing more than six months prior to dis-instruction without evidence of continuity of interest will not be deemed an effective introduction by the first agent to any subsequent sale post dis-instruction.

The guidance issued by TPO outlines agent obligations upon dis-instruction, 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 dis-instruction, 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 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.

‘All agents should keep full written records of all communications with both the seller and interested parties and note the advice provided and provide that evidence to TPO should a dispute arise,’ the guidance states, adding that if these steps are followed, the seller will be fully advised and aware of the implications.

‘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,’ said Katrine Sporle, Property Ombudsman.

‘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,’ she added.