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How can I sue my real estate agent?

Posted on 12th September 2019

People use estate agents for several reasons; buying and selling of a property, renting, management, and even for professional valuations.

As a profession, they are, however, not subject to mandatory regulation or qualification which means that the quality of them can vary vastly, which may explain why things can go wrong.

Complaints

The first step is always to raise any concerns you may have through their internal complaints procedure first. This is usually a prerequisite to any external complaint to much of the redress schemes.

Since 1 October 2014, all letting and property management agents are required to be a member of a compulsory redress scheme. If not, this in itself may lend weight to a complaint to your local trading standards department.

Estate agents are themselves compelled by the Consumer Estate Agents and Redress Act 2007 to be members of an ombudsman scheme.

If the agent is a member of a professional body (National Association of Estate Agents, Association of Residential Letting Agents, Association of Residential Managing Agents, or even Royal Institute of Chartered Surveyors), there may be further schemes of redress and investigation of your complaint.

Legal claims

The basis of a legal claim can arise from:

  1. A breach of duty
  2. A breach of contract
  3. A breach of statutory regulation

1. A breach of duty

In tort, they can be liable in professional negligence if a duty of care is owed to you which is breached and causes you (financial) loss. This is can be pursued in tandem with a breach of contract claim.

In any professional negligence claim you have to show:

a. Contractual obligations or a duty of care

b. Breach of the above by falling below the standard of the reasonable competent agent/surveyor

c. Which caused foreseeable and recoverable loss

2. A breach of contract

It is always advisable to have a written contract setting out all the terms between the parties to avoid ambiguity and argument later on.

You may wish to bring a claim for misrepresentation, failure to provide a service, overcharging, under/overvaluation, failure to secure appropriate checks, amongst other contractual duties.

In the recent case of Wells v Devani (2019), the Supreme Court had to adjudicate on whether an estate agent was entitled to a commission under an oral contract. Although it was not specifically spelt out when commission would be payable, the Supreme Court held that it was a common understanding that commission would be payable on completion of the transaction and payable out of the proceeds of the sale. It preferred the evidence of the agent that there had been discussions giving rise to contractual relations. The court would have (if necessary which was not) implied such a term into the contract to give the same business efficacy. The compensation award however, was reduced, as the agent fell foul of section 18 of the Estate Agents Act 1979, which required written notice of the circumstances giving rise to an agent’s fees.

3. A breach of statutory regulation

An agent may also be in breach of a whole raft of statutory obligations under the Deregulation Act 2015, the Estate Agents Act 1979, the Consumer Protection from Unfair Trading Regulations 2008, the Business Protection from Misleading Markets Regulations 2008, as well as the Consumers Estate Agents and Redress Act 2007.

The Property Ombudsman can issue fines against agents especially for breaching the Consumer Protection from Unfair Trading Regulations 2008

Under the new Client Money Protection Schemes for Property Agents (Requirement to Belong to a Scheme etc.) Regulations 2018 all private sector agents will be required to join a government approved Client Money Protection scheme by 1 April 2019 which provides greater protection for client money held by them for tenants and landlords. Failure can lead up to fines of up to £30,000 imposed by local authorities. This will ensure that monies are held with organisations regulated by the Financial Conduct Authority but also that the agents have appropriate professional indemnity insurance.

Whilst a breach of statutory regulation may sometimes only result in a fine rather than compensatory award, it will be very useful evidence of breach for the heads of claim above.

Final comments

Prevention is always better than cure so do your research and pick a good agent (especially with the benefit of professional indemnity insurance) to avoid the need to seek legal redress, but rest assured that if you pick the wrong one and things do go wrong there is a number of ways to seek legal redress.

If you have the benefit of Legal Expense Insurance as part of your home, contents or motor insurance, it may be that you can get a contribution towards the legal cost of seeking legal redress.

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