Dealing with problem estate agentsRejecting a commission claim

When are you liable to pay estate agent fees?

If you sell to someone who was introduced to you by the agent, you may be liable to pay agent fees, even after you’ve withdrawn your instructions. If the agent is a member of The Property Ombudsman (TPO), formerly the Ombudsman for Estate Agents (OEA), or National Association of Estate Agents (NAEA), they waive their right to commission six months after your withdrawal.

However the six month waiver does not stand if the subsequent sale was made privately to buyers introduced to the property rather than through another estate agent.

In our response to a government consultation on estate agency in 2008, we set out our view that there should be no overhanging liability if the seller uses an alternative estate agent and no more than one year overhanging liability where a private sale is agreed.

Beware of agents who aren’t members of the TPO or NAEA. They can make a claim for commission up to six years later based on the people they might claim to have 'introduced' to your property.

Who has the right to claim commission?

If you’ve instructed more than one agent on a multi-agency basis, the agent who actually introduced you to the eventual purchaser has the right to claim commission. If you signed a 'sole agency' agreement, but found a purchaser on your own, your agent may also put in a claim.

However in April 2008, Foxtons lost a High Court case over the definition of 'introduced'. The judgement found that to claim a commission fee, the agent must show they were the effective cause of the sale. In practice, this is likely to mean that an agent has to do more than just introduce a buyer but work on the sale to completion. Or, as the judge put it, introduce the purchaser to the purchase, not merely to the property.

Resources

High Court judgement on Foxtons case (PDF: 50Kb)

Read the court documents and find out what quantifies a claim for commission

‘Ready, willing and able’

Some contracts contain this clause which states that if the agent finds a ‘ready, willing and able’ purchaser, you must pay the agent commission, whether you sell the property to that purchaser or not. Although it’s currently legal, we urge you not to sign this agreement as there may be good reasons for withdrawing from sale and you shouldn’t be penalised if you do.

However, there are certain circumstances when you can avoid the penalty of paying commission to the agent:

When they enter into a no sale/no fee agreement with you, either verbally or backed up in writing, but still attempt to claim on the basis of ‘ready, willing and able’.
When the purchaser is not actually ‘ready, willing and able’. For instance, if the agent tells you the purchaser is a cash buyer, but you discover they don’t have an arranged mortgage, you shouldn’t have to pay commission.

Commission claim rejection template letters

If you receive a claim which you don't agree with, you can send this letter:

Reject claim for commission

Your address

Dear [Reference: address of seller's property]

I have received your letter of [date] requesting payment of the sum of [£......], representing [.....per cent] commission on the sale of the above property to [purchasers].

We were able to find a purchaser privately ourselves without any introduction or intervention from you. Our contract states that we are only liable to pay you commission if you introduce us to an eventual purchaser, or if another agent introduces us to an eventual purchaser during the sole agency period. This has not been the case. I therefore reject your claim for commission.

Yours sincerely,

If you think the 'ready, willing and able' clause applies to you, use this letter to reject a commission claim:

'Ready, willing and able' clause

Your address

Dear [Reference: address of seller's property]

I have received your bill dated [date] for [£.....] commission, to which you claim
you are entitled because you introduced [potential purchaser] to us who was a
‘buyer who was ready, willing and able to complete a transaction’.

It was an express term of our contract that you would be paid commission only
if you introduced someone to us who was ready to move and had sorted out
their payment transaction. In this case, [potential purchaser] has delayed/not
been able to arrange payment, and therefore cannot be regarded as ‘ready,
willing and able’ for the purposes of our agreement.

As you know, I asked you to take the property off the market on [date]. You are not entitled to commission. Please confirm in writing that you have now taken the property off your books.

I look forward to hearing from you within the next 14 days.

Yours sincerely,

Complaining about your agent

Sample letters on complaining to estate agents regulatory bodies and rejecting extra charges. Which? gives you the advice you need.

If you are unable to resolve an issue directly with your agent you can contact these regulatory bodies.

No information on charges

Sometimes estate agents will make a claim for charges you weren’t aware of. This is not legal but if you receive such a bill, you may wish to use this letter:

No advance information on charges

Your address

Dear [Reference: address of seller's property]

I have received your letter of [date] requesting the sum of [£...........], representing [.....per cent] agency commission on the sale of the above property to [purchasers], plus costs, charges in respect of [specify]. When I instructed you to handle the sale of the above property I was not given any details of the other charges you are now making in addition to your agency fees.

The Estate Agent’s Act 1979 and regulations and orders made under the Act require details of fees and charges, including any in addition to agency fees, to have been supplied in writing prior to my instructing you. In failing to provide such details you were breaking the law and I am not prepared to pay the sum in question unless you obtain a court order.

I am contacting my local Trading Standards Department about this matter.

Yours sincerely,

Making a complaint

If your estate agent is a member of a recognised trade association, they’ll have to abide by a code of practice. This ensures you have access to the right channels of complaint if you receive a below par service. The main trade associations you need to complain to are:

Royal Institution of Chartered Surveyors (RICS)
National Association of Estate Agents (NAEA) – remember, not all estate agents are members of this body.

But since October 2008, all estate agents do now have to be members of an OFT approved complaints scheme.

The two approved schemes are:

The letter set out below is a sample of what you might send. You may also wish to include a brief outline of the complaint, a chronology of the dispute and any specific breach of the code of conduct you’ve identified.

Complaint to OEA/NAEA/RICS

Your address

Dear [Reference: address of seller's property]

I am writing about my dispute with [estate agent – name and address], who I understand is a member of your scheme, and I enclose copies of all relevant correspondence including the particulars that the estate agent drew up on my behalf.

I have been unable to settle the matter with [estate agent], and am therefore referring the matter to you in hope that you will be able to resolve the dispute.
I look forward to hearing from you within the next 14 days.

Yours sincerely,