Agents must always be open and transparent
the price of a property may be affected if it is involved in legal proceedings.
Thursday, December 14, 2017
the price of a property may be affected if it is involved in legal proceedings. If estate agents know that a property is involved in legal proceedings, they should disclose this to their clients to protect their interests. If they fail to do so, they may be subjected to disciplinary actions by the Estate Agents Authority.
In a transaction involving two properties in an industrial building, an estate agent acted for both the purchaser and vendor.
After arranging for the purchaser to inspect the properties and negotiating a price between the two parties, she arranged for both sides to sign preliminary sale and purchase agreements relating to the two properties. But before the transactions were completed, the purchaser learned from his lawyer that there were legal proceedings involving the incorporated owners of the industrial building where the properties were located. He cancelled the transactions and lodged a complaint with the EAA.
During the EAA's investigation, it discovered that the estate agent knew about the legal proceedings before the purchaser inspected the properties and signed the preliminary sales and purchase agreements. However, she neither disclosed that fact to the purchaser nor state such relevant facts in the preliminary agreements.
According to the EAA disciplinary committee, the estate agent did not inform her client of the legal proceedings and advise him to seek legal advice on the attendant risk. The agent failed to comply with paragraph 3.4.1 of the Code of Ethics promulgated by the EAA, which states that estate agents and salespersons should protect and promote the interests of their clients, carry out the instructions of their clients in accordance with the estate agency agreement and act in an impartial and just manner to all parties involved in the transaction.
The committee decided to suspend the estate agent's license for 12 days. A condition was also attached to her license, requiring her to acquire 24 points of the Continuing Professional Development Scheme in 24 months.