The prospective buyers said they believed, based on the agent’s marketing details, that they were buying a freehold property.  However, during conveyancing they found it was leasehold and said if they had known this at the time they would not have looked or made an offer on the property. This impacted their mortgage application and delayed any progress to exchange of contracts. In addition, although the buyers were aware the property was a probate sale, they had not been made aware that two Grants of Probate (GOP) were required and only one was available. The buyers sought a refund of their costs which they claimed to be £2,749.

The agent’s response was that they were a sub-agent for another agent and not made aware of the issues stated. As such they refuted the complaints made against them but made a goodwill offer of £150, which was rejected by the buyers.

Investigation

Probate –Paragraph 5e of the Code of Practice states that an agent should take reasonable steps to satisfy themselves that the seller is entitled to instruct (such as obtaining title information from the Land Registry, Power of Attorney etc).

Despite being instructed as a sub-agent, the Ombudsman noted that this does not abrogate agent’s responsibilities under the Code 5d which states “if you are instructed as a sub-agent or share listings via a website, you must continue to act in accordance with all relevant provisions of this Code of Practice.’

Given the combined purposes of paragraphs 5d & 5e, the Ombudsman would have expected the agent to have carried out due diligence by checking information with the instructing agent before marketing. Whilst the Ombudsman acknowledged that the sale was particularly unusual in requiring two separate GOPs with only one being completed, had the title deed been examined, some discrepancies would likely have been highlighted leading to further questions before marketing commenced.

Tenure – The marketing details described the property as being freehold, however, sometime into the conveyancing, the buyers were advised by their solicitor that it was in fact leasehold.

Although it was apparent that the sub-agent sought and gained approval of the property details from the original agent before marketing commenced, the Ombudsman said that the sub-agent should have checked the title of the property, which would have confirmed the correct tenure in accordance with Paragraphs 7j and 7k of the Code.

The error made by the agent by describing the property incorrectly as freehold impacted the buyers’ transactional decision and caused the buyers avoidable financial loss.

Communication
The buyers complained that communication was poor throughout the conveyancing process. Much of their complaint centred on the difficulty in getting responses from the vendor’s solicitor, which was outside the control of the agent.

When the initial concerns with the probate issues were raised, it was clear from the agent’s notes that they attempted to gain answers and kept in regular contact with both the buyers and the other involved parties.

However, there was a gap in recorded communication regarding a revised offer made to take into account the increased deposit required. Whilst this was during the first Covid-19 lockdown, the Ombudsman would have expected to see notification from the agent of any impact on their service or consistent monitoring of the progress of the sale in accordance with paragraph 12a of the Code.

Outcome

The Ombudsman supported the complaints and considered that the circumstances merited an award of financial compensation.

The buyers requested compensation in the sum of £2,749; £749 being their actual costs and £2,000 for the stress and loss of other potential purchases.

The Ombudsman informed the buyers that the award made was intended to compensate them rather than to punish the agent for the shortcomings in service and as such are set at a level that she considered fair and reasonable in the circumstances.

The Ombudsman made an award of £850 in compensation as full and final settlement of the dispute and advised the agent that where they considered shortcomings arose as a result of the actions of the instructing agent, those were matters for the agents to resolve between them.

*This case study featured in The Negotiator Magazine/Website in October 2022