A continuing matter of concern
to me is the nature of disclosure
of relevant information relating
to to offers received for a
property that is for sale. Under the TPO
Code of Practice, paragraph 6a states that
an agent must by law:
“...tell sellers as soon as is reasonably
possible about all offers that you receive
at any time until contracts have been
exchanged (in Scotland, missives have been
concluded) unless the offer is an amount
or type which the seller has specifically
instructed you, in writing, not to pass on.
You must confirm each offer in writing to
the seller, and to the buyer who made it,
within two working days.”
The ‘by law’ refers to the Estate Agents
(Undesirable Practices)(No2) Order 1991
which is secondary legislation under the
Estate Agents Act 1979. Schedule 3 of
those Regulations defines as an undesirable
practice the knowing or reckless
misrepresentation of the existence or
details of any offer; and the failure to
forward promptly any offer – here, Trading
Standards could prosecute an agent.
I have seen scenarios where there is
doubt that it was a formal offer or was
it a prospective buyer musing over an offer
in conversation or was it part of a more
structured conversation? Agents
themselves are not always absolutely clear
about the status of the “offer” or proposed
offer and do not pass it to the seller
because in their view it was not a formal
offer and therefore no legal obligation to
take any action.
My view is that if there is a lack of
clarity in the agent’s mind he should
confirm the individual’s intentions and
record that he has asked the precise
question of the potential buyer as to whether he is making a formal offer and
if so, he will pass that on; or if is not a
formal offer that he will not be passing it
on. Avoidance of misunderstanding and
miscommunication means avoidance of
confusion and fewer complaints. When an
offer is accepted the Code of Practice goes
onto state at paragraph 6d that:
“When an offer has been accepted
subject to contract (in Scotland, conclusion
of missives) you must consult and take
the seller’s instructions as to whether the
property should be withdrawn from the
market, or continue to be marketed.
In the latter case, you must so advise
the prospective buyer in writing.
The prospective buyer must also be
informed in writing should the seller later
decide to put the property back on the
market. You remain under the legal
obligation to pass on offers....”
For an agent’s own protection he or
she should ensure that the decision made
by the seller as to continued marketing
(or otherwise) is properly recorded. It is the
sellers’ prerogative to take the property off
the market and an agent can only act on
that instruction. The buyer should be
informed as to the status of the property
that is on the market or withdrawn.
I am aware of the term “lock out
agreement” whereby the buyer will have
exclusivity for an agreed period and
seemingly no-one else has any right for
their offer to be considered. I am not sure
as to the legal status of a “lock out”
agreement but to my mind these only have
the status of a ‘gentleman’s agreement’
rather than a formal contract. However
such agreements are between the seller
and the buyer, so there can be no basis
for an agent to have entered into such an
arrangement without his client’s explicit
instruction to do so.
The terms of these lock out agreements,
whatever their legal status, should again be
clearly stated, unambiguous and the
subject of separate documentation to the
Memorandum of Sale, which in my view,
is simply providing factual information.
It would perhaps be very relevant for a
separate “pro-forma” to be used by agents
on which the seller makes his declaration
that he wants marketing to continue, or to
cease, or to have an exclusivity period –
and whether or not during that exclusivity
period the agent is to pass on offers he
receives. Whether or not the seller is
bound by the exclusivity arrangement or
lock out agreement can only be tested
in a court of law
