Time-saving try goes badly awry

2018-09-27

An estate agent acted for both the purchaser and the vendor in a residential property transaction.

She arranged for both parties to sign a provisional agreement for sale and purchase but later found out that the lawyer representing the vendor had not replied to requisitions on the title of the property raised by the lawyer representing the purchaser.

So, the completion date of the transaction could be delayed because of the title issue.

To expedite the transaction, however, she arranged for the purchaser to sign an acknowledgement to confirm her awareness of the legal proceedings involving the building’s property management company. That exposed the purchaser to potential risk of being unable to raise requisitions on potential title defects.

Additionally, as the completion date was postponed, the purchaser was not able to obtain the key to the property in time for a renovation.

Although the agent was aware of the legal advice given by the purchaser’s lawyer on the risks to which the purchaser would be exposed by obtaining the key before completion as the transaction might not be completed, she advised the purchaser to borrow the key to the property from the vendor and rent the property for renovation before the completion date. She also assured her that the title of the property was good.

Lawyers representing the purchaser and the vendor subsequently failed to resolve the dispute over the title. The purchaser did not complete the transaction as scheduled and suffered losses regarding rental and renovation expenses.

The purchaser then lodged a complaint with the Estate Agents Authority.

The EAA’s disciplinary committee found that the practitioner arranged for the purchaser to sign the acknowledgement despite the dispute over the title of the property. She also disregarded the risks involved and advised the purchaser to borrow the key to the property for renovation before the completion date.

The practitioner therefore failed to comply with paragraph 3.4.1 of the EAA’s code of ethics in that she failed to protect the purchaser’s interests.

The committee decided to reprimand the practitioner and suspend her licence for 14 days. Conditions were also attached to her licence, requiring her to obtain 12 points under the Continuing Professional Development Scheme within 24 months.

(Published in The Standard)