In a landmark case, Beresford Adams estate agents, part of Countrywide in Wales, have been found guilty of failing to disclose something about a property which could have put buyers off.
The case at Wrexham Magistrates Court, which was heard last month, is believed by the county’s trading standards officers to be a first and one which will set a precedent.
It was brought under the Consumer Protection from Unfair Trading Regulations 2008 – one of the two pieces of legislation replacing the Property Misdescription Act, which is being ditched.
Under guidance from the Office of Fair Trading, agents must not leave out important information. The guidance was issued in light of the Consumer Protection from Unfair Trading Regulations and also the Business Protection from Misleading Marketing Regulations 2008.
The guidance warns that breaches could lead to criminal enforcement action, unlimited fines and up to two years in prison.
Importantly, even if agents are not aware of a particular drawback or material feature, but should have been and fail to disclose it, then the agent could also be culpable.
The case against Beresford Adams was brought by Wrexham Council Trading Standards following receipt of a complaint in 2011 about a house that Beresford Adams was offering in the Rhos area.
The complainant had had an offer accepted on the property but subsequent searches and surveys revealed the presence of a mineshaft very close to the property.
Disappointment turned to anger when it was disclosed that Beresford Adams had been aware of the presence of the mineshaft for some time, having had their attention drawn to it by other potential purchasers who had withdrawn from purchasing when they too discovered about the old mine working.
However, the agents did nothing with this information and allowed the complainant to go ahead and incur the costs of searches and a survey.
Despite a submission from the barrister representing Beresford Adams that an appropriate penalty would be a conditional discharge, Wrexham magistrates imposed a fine of £3,500.
Beresford Adams were also ordered to pay the council costs of £5,000 and to pay the complainant compensation of £515, representing the cost of searches and surveys incurred which would never have been commissioned had the information about the mineshaft been disclosed.
Wrexham Trading Standards said the decision of the magistrates in the case could have far reaching implications for estate agents.
Councillor David Griffiths, lead member for health and social care at the council, said: “This is a welcome decision that supports the view that house buyers should be protected as consumers in just the same way as all other consumers.
“For almost everybody, buying a house is the single biggest financial transaction they will ever make and it is vital that those who are in business selling homes act professionally by not only giving true and accurate information but also by not withholding relevant significant information.”
EAT asked Countrywide to comment on the case, and to say whether it had issued new guidance to its offices as a result.
A spokesperson for Beresford Adams said: “We are committed to providing excellent services to our customers. We have no other comment to make in respect of this matter at this time.”
Currently, the Ombudsman’s Code of Practice states that: “The estate agent must describe the property as accurately as possible and not misrepresent the details.” The Code also refers to the need to make disclosures under the newer legislation.
The issue in this case was that the estate agent did not misrepresent the details of the property but did make a misleading omission, and that is covered by the 2008 Consumer Protection from Unfair Trading Regulations Act.
This is how we ran the guidance from the OFT: