Double Trouble: Unveiling Dual Fees in Estate Agency

INVESTIGATION

The sellers said that:

• At the time of signing the agreement, agent B did not check the previous agency agreement (agent A) although previously introduced buyers were noted and agreed to be excluded from the fee liability.
• Agent B neglected to refer buyers, previously introduced by Agent A, back to Agent A.
• Agent B’s threat of immediate court action with additional cost liability and interest payment and a verbal threat of blocking completion of the property sale compelled them to make the payment 'without prejudice'. There was also an unannounced personal visit made by the agent to reinforce the statements made. The sellers said such behaviour was perceived to be intimidating.
• Agent B made unfair claims about the sellers having ‘played’ or ‘misled’ them which was a further point of pressure during their move to compel them to make payment of the fee immediately.

The sellers requested a refund of the fee which they said was only paid agent B because of their threat of legal action.

In response, agent B said:

• The sellers were in full receipt of the facts regarding the possibility of two fees being charged before they signed contracts. Furthermore, agent B said they modified their contract in accordance with the sellers’ wishes should the buyers approach them directly, through agent A or through agent B.
• All issues were addressed and settled with the sellers prior to contract signing.
• It was only after contract exchange that the sellers' solicitor revealed their refusal to pay the fee.
• The seller misrepresented an unannounced visit by Agent B's staff, whereas Agent B clarified that they had mutually agreed on a face-to-face meeting following multiple phone calls. The interaction was brief and amicable, concluding when the seller suggested a compromise.
• Agent B denies any coercion, asserting that they were compelled to reach a compromise solely to cover staff expenses.

In coming to a decision, the Ombudsman considered agent B’s obligations under paragraphs 5t, 5v and 8d of the TPO Code of Practice for Residential Estate Agents,

 

Timeline

The sellers signed a 20-week sole agency agreement with agent A. Just under two weeks later, the buyers viewed the property through and made an offer the next day, which was rejected by the sellers.

A month later, the buyers viewed again but did not increase their offer. A week later, the sellers terminated their agreement with agent A.  Another month on, the sellers signed a sole selling rights agreement with agent B. This agreement noted previous interest from the buyers, specifically naming them.

It was unclear when the buyers viewed the property through agent B or made their offer, but both the sellers and agent B were aware of their previous interaction with agent A.

Four months later, contracts were exchanged and agent B submitted their commission fee invoice for £12,900 (including VAT), which the sellers' solicitor refused to pay from the sale proceeds.

Agent B objected, stating that their contract excluded a fee if the sellers introduced a buyer, but the buyers were introduced by agent B after showing interest through another agent.

Attempts at negotiation failed, and the sellers paid agent B’s commission fee invoice without prejudice. A month later, agent A submitted their commission fee invoice to the sellers.

 

The buyers initially viewed the property through agent A, and made an offer the next day, which was not accepted by the sellers. After discussions with agent A, the buyers viewed again a month later. It was this viewing, along with agent A’s marketing efforts, that sparked the buyers' interest. Therefore, the Ombudsman concluded that agent A effectively introduced the buyers to the property.

Agent B should have referred the sale back to agent A upon becoming aware of the buyers' previous interaction. Although agent B claimed to have discussed the possibility of dual fees with the sellers before signing the agency agreement, this conversation was not documented.

TPO’s view is that no agent should expose their client to the potential to have to pay two commission fees; agent B’s actions in this case were contrary to best practice expectations as they did not appear to have properly advised on how the sellers could avoid such a situation.

Furthermore, agent B’s assertive pursuit of the fee, coupled with threats of legal action and an unannounced visit, may have intimidated the sellers. However, the evidence regarding the visit's arrangement was inconclusive, and the Ombudsman could not ascertain whether it was truly unannounced or inappropriate.

OUTCOME

 

The Ombudsman supported the complaint and considered that, due to the agent’s shortcomings which exposed the sellers to paying dual commission fees, the circumstances merited an award of compensation.

The Ombudsman made an award equivalent to the fee (£12,900) plus an additional amount (£250) to compensate the sellers for the aggravation and distress caused.