Do estate agents have an obligation to find out whether the reason a vendor is selling their property is due to a divorce or partnership split? According to Paul Offley, Compliance Officer at The Guild of Property Professionals, the answer to the question depends on whether this could ultimately impact the transaction and potentially cause delays.
“It goes without saying that agents are required to do their due diligence and find out who the owners are who are consenting to the sale of the property, but does the reason behind sale matter? It does if the reason could have an impact on the buyer’s decision to purchase the property,” says Offley.
He adds that there have been instances where a sale had been agreed and solicitors had been instructed, but it had come to light that the sellers were going through a divorce and the financial agreement between the sellers had not been finalised. As a result, the sale was delayed, and the buyer was unable to move at the date they needed to. “The buyer claimed that they were unable to wait the length of time it would take to get the agreement finalised, and if they had known at the start it would be a potentially protracted sale, they would not have proceeded. As a result, they wanted to withdraw from the transaction and were seeking to cover the costs which they had incurred in terms of mortgage applications, solicitors, survey costs, etc,” Offley comments.
Is that a reasonable claim? Offley says that in terms of Consumer Protection from Unfair Trading Regulations 2008, a consumer would need to demonstrate that there was a piece of information missing, which would have materially impacted their decision to go with that transaction. Only a court would be able to decide whether the claim would be successful or not, but it just goes to prove that more and more people are using that legislation to try and recover costs or make a claim against the agent.
“What steps can agents take to ensure they are covering themselves against such claims? As part of an agent’s Anti-Money Laundering (AML) assessment, they need to assess the risk of the transaction and one of things they would look at is the reason for the property being sold. If the agent knows the property is being sold because of a divorce or partnership split, then it is worth taking that a step further and establishing whether there is anything they could possibly result in a delay to the transaction. This won’t necessarily help with AML but will help agents avoid CPR claims,” says Offley.
He notes that another thing to consider is the buyer’s time scales. “When agreeing a sale with a buyer it is worth asking whether they have a strict time scale they need to complete by. While agents can’t be involved in setting those time scales, it will provide some guidance with regard to certain time constraints buyers may have,” Offley comments. “Establishing a reason for sale and how that could impact the transaction, will ensure that all parties are aware of all the information they require to make an informed decision, while ensuring that agents are protected from any potential CPR claims,” he concludes.