The relationship of the estate agent and their customer is one which is usually governed by a contract, or as it sometimes referred to, retainer. The position at law as to the role of estate agents is however somewhat unusual when compared with the role of other contractual agents as they are not normally bound to act at all.
What does that mean?
The general rule with an estate agent is that they are not bound to do anything for their commission, rather, they are simply entitled to their commission if a specified event takes place (usually the sale of a property).
So can an estate agent do nothing?
In theory, yes. However, whilst the law does place the burden solely upon the instructing party to pay a reward if the aim is achieved, this does not mean an estate agent can make no attempt to do what is asked of them. This is particularly so where they are the sole agent. In practice it is far more likely that the agent will act, but that in acting does something, or fails to do something that is required. In circumstances where an agent tries to effect a sale the usual principals of doing the job with reasonable skill and care would apply. In other words, if Mr Bloggs (the agent) fails to provide Mr Smith (his customer) with a service one would usually expect he will in all likelihood find himself in breach of his obligations to his customer.
So what might amount to a breach of an estate agent’s obligations?
Well, if Mr Bloggs advised Mr Smith to market his property at £400,000 and sold another property in the same street around the same time for £500,000 without telling Mr Smith this may be a breach of duty as Mr Smith would have lost the opportunity of selling his property at the higher price.
Similarly, if Mr Bloggs received an offer on Mr Smith’s property which was very close to the figure Mr Smith wanted, but Mr Bloggs failed to negotiate, or failed to notify Mr Smith this might result in a lost opportunity.
Or, if Mr Bloggs purposely failed to tell Mr Smith about an offer received, a commission received or any other important facts this too could be a breach of duty. Finally, if Mr Bloggs failed to keep proper accounts of funds received from Mr Smith and failed to provide them on request this may be a breach of duty.
So what can you do if your estate agent has neglected their duty and you think they have caused you a loss?
That all depends on the type of breach, what the loss is and whether you can show that the loss resulted from the agent’s acts or omission. If there is a duty owed to you there is usually a cause of action you can pursue whether this is through a contract with your agent, in negligence or on pure common law principles which establish that an agent owes such a duty, and in your case such a duty was breached. It is usually proving a resulting loss which is the most difficult hurdle.
So what is the difficulty with proving the loss caused?
In practice cases involving estate agents often relate to a lost opportunity or a loss of a chance as it is sometimes called by lawyers. In such cases it is often difficult to prove how likely it is, using the example regarding the neighbouring property sold at the higher price, that you would have sold the property at that price were it not for the agent failing to disclose or failing to advise you to market it at that price. In these types of cases you must be able to show on the balance of probabilities what action you would have taken if the agent had not been negligent, decide whether the chance that you have lost is a real or a substantial chance, rather than a speculative one and be able to give a clear assessment of the percentage chance that you have lost. In short you need to a chance that is not speculative – which always pre-empts the question: what chance is not speculative? This is not an issue in cases where it is clear on the facts that there has been a breach of duty such as where accounts have not been kept. Unfortunately these cases are few and far between, which leaves most potential litigants with the problem of trying to quantify with a percentage the likelihood of events occurring.
If you have had an issue with your agent and need advice on a lost opportunity, at Benchmark Solicitors we can advise you about these complex claims.
Louise Delgado, Solicitor – 10 July 2012