Slamming door against risks

2015-03

If estate agents know properties are involved in legal proceedings they should disclose the facts to clients because a transaction might involve risks.

The risks could include a property’s price being affected.

One estate agent went awry in acting for both the purchaser and the vendor in a transaction of two properties in an industrial building.

After arranging for the purchaser to inspect the properties and negotiating a price between the parties, the agent arranged for a provisional agreement of sale and purchase document to be signed. Before completing the transactions, however, the prospective purchaser learned from his lawyer that there were legal moves being taken by the incorporated owners of the building in which the two properties he intended to purchase were sited.

Worried about the potential cost and risk involved, he canceled the transactions and lodged a complaint against the agent with the Estate Agents Authority.

The EAA investigated and discovered that though the agent knew about the legal proceedings before the inspection of the properties and the signing of the PASP she did not disclose that fact to the purchaser., Nor did she state that fact in the PASP.

So the agent failed to comply with the code of ethics that states agents and salespeople should protect and promote the interests of clients, carry out the instructions of clients in accordance with the estate agency agreement, and act in an impartial and just manner to all parties in a transaction.

This led to her license being suspended for 12 days.

A condition was also attached to the agent’s license, requiring her to earn within two years 24 points in core subjects of the EAA’s Continuing Professional Development Scheme.