Liability for two sets of fees!
Q. Can a previously instructed agent claim a fee when a property is subsequently sold to a buyer he originally introduced?
A. A very interesting question indeed! In fact, this is, I believe, something of a grey area
Until a few years ago, many if not most agents used to include a “ready, willing and able” clause in their contracts. This basically meant that as long as they were responsible for originally introducing the buyer who wanted to buy your home, then they were entitled to their fee – irrespective of whether the actual sale was completed or not. Moreover, some agents weren’t above claiming that they were entitled to a piece of the action purely on the grounds that they had advertised the property so extensively in the marketplace that the buyer must have become aware of it through their efforts!
Then, in 2008 in a landmark case, the Appeal Court found against well-known London agents who had tried to sue a seller for their commission on the grounds that they had originally introduced the buyer to the property. The judgement said that it was no longer enough to introduce a buyer to a property. The buyer had to be “introduced to the sale.”
In other words, for an agent to be entitled to payment of their commission, they must be able to show that they were the effective cause of the completed transaction.
However, even this ruling is not necessarily quite as cut and dried as it might first appear. If the first agent did no more than give out a set of details to the eventual buyer, then he may not have a case for earning a fee. But what if he did everything possible to progress the sale – arranged viewings, for example, made regular follow-up calls, or perhaps even successfully negotiated an acceptable offer – only to lose the instruction at the last gasp when his contract lapsed? He would then have a rather stronger case for arguing that the eventual sale was very much the result of his own work. What is clear is that estate agents need to show they are effective in creating the sale, so earning their commission.
Most critically for sellers is to ensure they trust the agent they instruct to look after their interests properly and ensure they don’t land in a situation where they could become liable for two sets of fees.
Paul Bonett F.N.A.E.A. M,.A.R.L.A.