Annual Report: Pre-contract deposits

The complainant agreed to buy the property for £30,000 and paid £5,000 to the agent to reserve it. He wanted his £5,000 returned because when he saw the property, he realised it was not at all what he had expected and it was unsuited to his needs. 

The complainant was looking for a property to rent out.  He had £35,000 to spend and needed about £400 a month return. 

In this case the sales particulars were sent to the complainant. The property is in a terrace and the entire terrace appeared in the photograph.  Because of the angle, the left hand end of the terrace was prominent and the right hand end, where the property is, was very hard to see.  As neither the photograph nor the description in the sales particulars indicate which property was for sale, the complainant made a justifiable but incorrect assumption from the photograph that it was the end property.

The complainant repeatedly asked the agent for confirmation, but the agent failed to clearly identify which property was on the market.  The cause of this misunderstanding was due to the agent using a photograph which featured a number of properties and was dominated by one which was not for sale.

Further confusion arose.  The complainant thought the property was on the ground and first floors, in effect a house, whereas it is actually on the first and second floor.  The risk of confusion over which two floors were for sale, given that a third floor was not visible on the photograph of the exterior, was obvious.  The agent failed to say the property was on the first and second floors, even when asked if it was ground floor.

Again it was the agent’s responsibility in law as well as under Paragraph 7i of the TPO Code to accurately and clearly describe what they are selling.  The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) require an estate agent to disclose all information which would be material to an average buyer.  Every buyer needs to know exactly which property they are buying, if it is a flat or a house, which floor(s) it is on and how many bedrooms it has in order to make their decision. 

Next, the sales particulars described a “third bedroom”.  The seller was advised by the agent that he could let the three bedrooms individually. However, the third room was not a bedroom; it had two doors off to the other rooms at first floor level and from which stairs led to the second floor. It would correctly be described as a hall or passage; it should not have been described as a bedroom as opposed to a hall capable of accommodating a bed, and it would not be suitable for letting to a third unconnected individual. 

The Ombudsman held that the sales particulars gave an incorrect impression as to which property was for sale, and the number of bedrooms, and omitted the material information that it was an apartment over the first and second floors. The complainant had made his offer, and paid £5,000 to the agent, on the basis of the information contained within the sales particulars.  This gave a misinformed understanding as to which property he was buying, over which floors it was arranged, and how many bedrooms it could reasonably be described as having.

In this case, the pre-contract agreement that the seller signed was a contract between him and the agent, not between him and the seller, as it should have been as it committed the seller to instruct solicitors and negotiate with no-one else.  The agent should not have made a contract that prevented the seller trying to find a buyer or accepting an offer from someone else.  It was not the agent’s decision to take the property off the market and, whatever the agreement said, they still had a legal obligation to put forward all offers when received should someone other than the reserved buyer come forward with an offer. 

The Ombudsman considered that, due to the agent’s shortcomings, the complainant did not stand to acquire a property like the one the agent had allowed him to understand he was intending to buy.

The complaint was supported.  The fair and reasonable outcome was that the agent return to the complainant the sum of £5,000, in full and final settlement of this dispute.