The Property Ombudsman awarded would-be purchasers £350 after they withdrew from a sale because of a mineshaft.
The case has similarities to, but is unrelated to, one that also concerned a mineshaft, and as far as we are aware is the only CPR case involving agents and their duties of disclosure to have got as far as the courts.
The TPO’s latest report, covering the period May 1 to August 31, has a number of case studies on Consumer Protection from Unfair Trading Regulations (CPR).
CPR has yet to be properly tested in a court of law where it concerns estate agents.
The one case so far to get to get to the courts concerned a mineshaft that was allegedly not disclosed to would-be purchasers, although it was claimed that the agents, Beresford Adams, part of Countrywide, knew about it because previous purchasers had withdrawn for that reason.
The second set of purchasers withdrew after the presence of the mineshaft was discovered by the surveyor they had commissioned.
A case was brought by Wrexham Trading Standards in Wales which won it initially, but the ruling was overturned on appeal because they had failed to interview the branch manager.
(https://www.estateagenttoday.co.uk/oldeat_news_features/Judge-rules-agent-did-not-mislead-buyer-in-mine-shaft-case)
The case study in the TPO’s report, published yesterday, is headlined “Mineshaft – misleading omission”.
In the case study, ombudsman Christopher Hamer said that the buyers would not have proceeded to make an offer and incur costs had they known of “environmental issues” associated with the property. From the agent’s file, it was apparent that a previous buyer had withdrawn from the transaction, although the reasons were “unclear”.
The case study says the buyers were made aware of a failed environmental search by their own solicitor, but nevertheless commissioned a survey.
Hamer notes that the fact that they had commissioned a survey even once they knew of the issue meant they might have gone ahead with the transaction. He did think there was “sufficient evidence” to conclude that the agent knew of the issue, but that the agent had not told the buyer.
TPO therefore partially upheld the complaint in making the award of £350.
In another case study, buyers withdrew because of a major local development of 1,200 houses on what would have been their doorstep in the draft local plan. They found out about it only after watching a local news programme.
The agent had not told them about this, even though the draft local plan had been made public months beforehand.
The agent contested that the buyers had never asked about any proposed local developments.
The ombudsman said that the size of the development proposed was material information which should have been disclosed, and given its public nature, he did “not consider any claim of ignorance on the agents’ part was reasonable in the circumstances”.
However, the ombudsman accepted that the proposed development would not deter all purchasers – evidenced by the fact that the property in question sold promptly to another buyer who knew about it.
Hamer supported the complaint and awarded £225.
Other case studies in the report also relate to misleading omissions by both sales and lettings agents – well worth reading, given the lack of case law on CPR. The case studies include disclosure of burglaries and parking issues.
The report also shows that complaints to the Property Ombudsman about both sales and lettings went up in the period covered.
A rise of 16.4% in the number of complaints between May 1 and August 31 this year included 1,833 complaints about sales (up from 1,419 for the same period last year) and 3,454 complaints about lettings (up from 2,889).
However, just 221 complaints against sales agents went to formal review – only seven more than for the same period a year ago – and of these 167 were supported in favour of the complainant. A total of 73 were not supported.
https://www.tpos.co.uk/quarterly_report.htm
Comments
@Happy Chappy
Okay CPRs / FSBO
Wells there are places in CPR's that effect FSBO portal operatives. ie a FSBO operative ''portal'' can only bring sellers and buyers together. Such operatives can not offer ancilliary services, but away from the restraints of the previous 1979 Estate Agents Act such portal owners can provide a FS board to the FSBO person with reference to where the property details are and a FSBO's tel no.
If the FSBO is a business who deal in property then the seller may have to abide to CPR regulations and poss BPR's.
If the FSBO is a private Joe, just selling their own home, then CPR's wouldnt apply. but misleading comments to achieve their sale could warrent that the buyer could sue them in court.
Trevor for once we totally agree - now how does CPR effect FSBO?
Technically speaking I'm not sure that a 'draft local plan' is a 'material fact'. OK the TPO must know far more than I about legal niceties but I don't feel that either the word 'draft' or 'plan' has much to do with 'fact'. Certainly doesn't here in Somerset anyway !
Pedantic & Grumpy
@ MCS
CPR's covers sales and lettings - for instance: The CPR's in lettings was heavily based on 4000 queries raised in 2011 against letting professionals. So the powers that be have only addressed industry complaints. It's not quango's but changes in lawful practice in areas of concern.
Its unfortunatley a case that agents need to learn a new set of rules. Those who don't will attract attention. The OFT pass over governance to Trading Standards April 2014 and agents will get caught out by ignorance.
* If you look at the case above - why did the agent get done. Simply - they knew something and chose net to tell the buyers. the buyers ran up costs on a purchase they wouldnt have entered into. Alike - if you was buying a car and the salesman didnt tell you that the gearbox had been patched to keep it running another 1000 miles, would you want your money back, or the repair paid for in 2-3 weeks when the gearbox failed.
Its just about fair play.
Ignorance is no excuse for bad practice by agents.
The CPR's have been about since 2008 and revised and pushed into the limelight in Sept 2012. many agents knew of the EA Act and basically CPRs and BPR's are noe your current estate agents acts.
The main part that CPR's brought was omisisons. In otherwords before 'if in doubt you could leave it out' but now 'if in doubt - check it out, AND if in the know, let the prospective buyers or tenants know too.
Ask yourselves - if someone knew about something you didnt and they sold you a property, goods or a service that wasn't true. Wouldnt you be pee'd off.
If you take time to understand CPR's they actually do our industry a favour. In fact the agent in question is so lucky the buyers found out and pulled out. had the sale of gone through maybe the offence would have cost the agency £3,500-£35k
@ Anonymous Coward
The answer is Yes you need to put all staff in proceedure, according to their roles and abilities. You then need to show that you have made them aware of what they can and can't do and get them to sin to say they understand. If you don't - on your head. ie, a Saturday member of staff would not be expecetd to know as much as a neg. equally a neg may be accepted as having lessor understanding than a manager. So also nominate who can do what from take ons, to taking offers.
@ Mark Walker on 2013-12-06 09:23:52
Unless our 'trade associations', NAEA, ARLA, RICS etc.,
get together and stand up to these self important 'quangos' it is only going to get worse. These people are 'empire building' and the profession should be very aware.
"given its public nature, he did “not consider any claim of ignorance on the agents’ part was reasonable in the circumstances” - but was on the general public's part? FFS.
Let's face it we are now guilty of EVERYTHING. We might as well do away with putting a price or a description of the property out and replace it all with a page of reasons why someone might want to avoid buying the property.
@Why and @ARLA Member - an interesting question and one that I took up with Mr Hamer just a few days ago.
I was checking to see if our published complaints procedure was correct.
It occurred to me that we have members or ARLA, NAEA, RICS and ARMA at our office - so which of them should I put in the procedure. Did I need to put in all 4? Did I also need to put in TPOS?
My question to TPOS was essentially - what is the pecking order?
His advice was put down TPOS, as the others will probably refer a complaint to them in the end anyway.
Plus, if a complaint is made to TPOS which is turned down by them, ARLA and the rest will take that result into account whereas TPOS will (probably) start a new enquiry.
@Why - they dont. They require independent redress through TPOS or OSP
Why do RICS, ARLA etc agents belong to TPO when they already have redress through RICS an ARLA?