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Estate Agents and Sole Selling Rights

It has always been a given, or almost, that estate agents succeed when they sue for their fees. On the basis that they remain slightly more unpopular, even than solicitors, we might all take time to smile quietly at of the case of Harwood (trading as RSBS Group) -v- Smith and another reported in the Times on 8 December 1997.

The purchaser was found, but he was found by the owner himself. The seller himself answered the purchaser's advertisement in a newspaper. He approached the purchaser himself, and negotiated and took the entire transaction through without reference to the Estate Agent. The agent accepted that his firm had had no involvement at all in the transaction. Nevertheless, he claimed his fees (as estate agents do).

When the matter got to the Court of Appeal, the Court had to look at the particular terms of the agreement. Accepting the very wide powers taken by the sole agency, the court interpreted the agreement against the Agent, taking clauses in the agreement as a complete statement of the circumstances under which the estate agent expected to claim his commission. Since each of the ways described required some involvement from the agent, the court found that a sale without the agent's involvement meant that the agent lost his right to be paid. The court applied consumer law type tests to interpret the terms tightly against the person seeking to rely upon them.

Why on earth, we ask, could the Estate Agent consider himself able to claim such a payment in any event? It seems a bare-faced cheek. The answer is that he thought he had secured what are called 'Sole selling rights' i.e. the sole and exclusive right to negotiate a sale of the property. Such terms are common, and though we do not have the exact phraseology used in this case, we should not expect this restricted interpretation always to be followed by courts when the agents terms are even slightly different. To be fair also, the Agent will himself have expended time and money on putting the house before the public. He did not do so thinking that the seller was in competition.

The moral for the agents is to tighten up their estate agency terms, and the moral for clients is to make sure that they read the terms very carefully before signing them. They are usually quite draconian, and, in any event, in case of a dispute to consider the terms very carefully and very precisely.

Please ask also what would happen if you wished to challenge your estate agents bill, and the solicitor you used was dependent upon that estate agent for his work.

Important: Please note that our law-bytes are retained for archival purposes only. The law changes, and these notes are often, now, out of date. You must take direct advice on your own personal situation and the law as it currently stands.
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18 October 2013 110 18 October 2013