The Buyer was interested in a property for sale by the Agent and booked a viewing with the Agent. During the initial viewing, the Property looked great and appeared to be everything they wanted. They were told that if they wished to proceed, they would be required to pay a reservation fee of £1,000 to secure the property from the market.
After paying the reservation fee, the Buyer went to view the property again without the Agent present. They noticed that the ground to the rear of the property was soggy. They also noted that there was a ditch behind the garden fence. This was only behind the property and not the neighbouring properties. This rang alarm bells for the Buyer.
On a later visit to the property, the Buyer spoke to a neighbour who informed them that there was a flood in 2007 which badly damaged the original property. They learned that the flood water came in from the road and was carried away to the ditch to the rear. The Buyer also learned that a builder informed the neighbour that the property required underpinning due to the water damage and, as such, it was cheaper to demolish it and build two new semi-detached properties in its place. Hence why there were now two properties, numbers 19 and 19a.
After discovering these issues with the house, the Buyer decided it was best to withdraw their offer and request the return of their reservation fee.
The Agent refused their request and the Buyer complained referring to misleading information about the property.
In considering the issues raised, when marketing a property for sale, under 7I of the TPO Code, the Agent had an obligation to disclose any material information of which they are aware of in relation to a property in a clear, intelligible, and timely fashion. Agents also have a duty not to mislead consumers by failing to give them the information they need to make informed decisions.
The Agent was not expected at the outset of the process to research issues which would normally be picked up by a surveyor. However, it is relevant to note that misleading omissions can still occur in circumstances where an agent does not know a particular piece of material information if reasonable enquiries may have revealed such information.
In this case it was impossible to establish what reasonable enquiries were carried out by the Agent with the Seller at the onset of marketing, if any, as they chose not to co-operate with TPO and provide their branch file. Nevertheless, as the property professional, the Agent was expected to demonstrate that they met their obligations under the TPO Code.
The research was carried out by the Adjudicator into the flood risk of the area the property was located in. It was defined to be in a medium risk area with between a 1% and 3.3% chance of flooding. The local council’s website also reported that the area suffered widespread surface flooding in 2007 but that they had since implemented flood defence schemes.
This was information the Buyers were entitled to expect the Agent to have made enquiries into from the outset so that they could then pass their findings onto all potential buyers in a clear intelligible and timely manner, and afford them the opportunity to make whatever transactional decision they intended to make in full knowledge of the relevant material information.
In relation to the complaint made, the Agent did not evidence that they carried out sufficient enquiries with the Seller, based on the available evidence, in order to identify key material information about the Property to pass onto all potential buyers. This would have included information relating to the previous flooding, demolition of the previous property and the construction of two new properties. It was considered that the Agent’s omissions impacted upon the Buyer’s transactional decision to offer for the property and that the omission led to the eventual breakdown in trust and withdrawal from the transaction.
The complaint was supported, and the £1,000 reservation fee was returned to the Buyer. It was up to the Agent to decide whether they wished to recover the loss from the Seller based on what the Seller may or may not have told them.