Rapped for firsthand bad advice

2016-05

AN ESTATE AGENT arranged for a prospective purchaser to inspect one of the remaining unsold units of a completed firsthand residential development.

Before proceeding with the purchase, the client was informed by the estate agent she could sign a provisional agreement for sale and purchase using the form normally associated with secondhand transactions, as the property was a unit in a completed project.

According to the PASP, the purchaser had to pay the estate agent’s company a commission of 1 percent of the purchase price, but the form did not mention the buyer would also need to pay certain fees to the vendor, that is, the developer.

Upon signing the formal agreement, the purchaser was informed by her solicitors she would have to pay various fees to the developer, including disposal of debris fee, plan fee and deed of mutual covenant fee (Developers Fees) as it was a first-hand property deal.

Feeling aggrieved, she lodged a complaint with the Estate Agents Authority.

Upon investigation, the EAA Disciplinary Committee found the agent had failed to take note that the transaction involved a firsthand property.

Furthermore, the agent also failed to inquire with the developer as to the fees payable by the purchaser to the developer in respect to such a transaction, and thus failed to advise the purchaser accordingly.

Therefore, she had failed to comply with paragraph 3.2.2 of the Code of Ethics, which states: “Estate agents and salespersons should keep themselves informed of any laws, government regulations, essential facts and developments in the real estate market, in order to be in a position to advise their clients in a responsible manner. They should strive to provide services and opinions based on knowledge, training, qualifications and experience in the real estate business.”

The Disciplinary Committee decided to reprimand the estate agent, and attach a condition to her license, requiring her to obtain 12 points under the Continuing Professional Development Scheme within 12 months.