Paula Higgins, chief executive, Homeowners Alliance says: Unfortunately, it is quite common for there to be a dispute where the estate agent alleges that they have introduced the buyer, but the homeowner disagrees. The HomeOwners Alliance regularly helps members who are involved in estate agent commission disputes as many estate agent contracts are – surprise surprise – written to favour the agent rather than the consumer.
In this situation, the options open to you will depend upon when and how you terminated the contract with the agent and how detailed or transparent that contract was.
Did you give the first agent written notice of termination and, if so, did they discuss the issue of continuing liability when they acknowledged the notice of termination?
Many estate agents are members of The Property Ombudsman scheme, which offers redress to consumers, and subscribe to its code of practice. This states that “at the time of the termination of the instruction, you must explain clearly in writing any continuing liability the client may have to pay you a commission fee and any circumstances in which the client may otherwise have to pay more than one commission fee”.
In other words, if the agent is asking for commission now and this is the first time you’ve heard that this could happen after you’ve cancelled your agreement with them, it’s likely that you weren’t given all the information you should have been when you parted ways. If the agent wasn't clear on the repercussions of termination, you can use that in your defence.
You don’t say how long ago you terminated the contract with the original agent or when you sold your property.
If you exchanged contracts with the buyer (who was allegedly introduced by the first agent) over six months after termination of the first agent's contract, the first agent may be time-barred from claiming a commission. I’m assuming here that another agent was involved in the sale.
Unfortunately, if you arranged the sale yourself the liability period can extend to two years. These are the time periods set out in The Property Ombudsman's Code of Practice and considered the industry norm – but do check your contract to see if it says otherwise.
It’s certainly worth checking how the term ‘introduction’ is defined in your contract. Some contracts define introduction as anyone who has seen the property on the internet. However, our view would be that that should not be sufficient to create an entitlement for commission. And there is case law which states that the agent needs to be the “effective cause of sale”. If the first agent didn't have much contact with this purchaser – and clearly they didn't get the deal done – you could argue they weren’t the effective cause of sale.
If the original agent continues to fight, you could ask your new agent to contact them. Often agents will discuss together how the commission should be split.
For anyone considering terminating a contract with their estate agent, we would always recommend getting confirmation of the termination date in writing as well as a list of all those people who the agent has introduced to the property (which we would argue should just be people who have physically viewed it as opposed to those who have just seen it online).
The list of names is important, and you will need to share it with your new estate agent. If one of the people listed goes on to buy the property, then you may owe commission to your first estate agent. If both agents can prove that they played a role in securing your buyer, then let them argue it out and split the commission. Get a written agreement from both agents on who you are paying commission to before exchange otherwise you could be liable to pay twice. In the event of a dispute, you can join the HomeOwners Alliance to get legal advice and support.
Paula Higgins is chief executive of property help portal, the HomeOwners Alliance and is one of the organisation’s co-founders.