Agency Terms (Sales)

Published on 2015-07-06

The Estate Agents (Provision of Information) Regulations 1991, Regulation 5 is the piece of legislation that covers information about estate agency terms of ‘sole agency’, ‘sole selling rights’ and ‘ready, willing and able purchaser or buyer’. If these terms are used in the estate agency contract, they must be explained using the statutory wording. The information indicates under what circumstances sellers have to pay commission to the estate agent. This information must be given in writing before the seller is committed to the estate agent.

Sole Agency

The prescribed wording for Sole Agency in the Regulations means that the seller has to pay the estate agent the agreed fee if the agent with the a sole agency agreement introduces a buyer who proceeds to exchange contracts. The fee has to be paid even if the exchange of contracts occurs outside the original agency period, as long as the buyer is introduced during the agency period. The fee will also have to be paid if another agent introduces a buyer within the agreed sole agency period. A fee would not have to be paid if the seller themselves, or a friend or relative of the seller, introduced a buyer.

Sole Selling Rights

The prescribed wording for Sole Selling Rights in the Regulations means that the seller will have to pay the appointed estate agent the agreed fee, whoever introduces a buyer within the agency period, as long as the buyer introduced exchanges contracts, even if the exchange of contracts occurs outside the agency period. The buyer could be introduced by another agent, a friend of the seller or the seller themselves. It does not matter – the agreed fee still has to be paid.

Ready, Willing and Able Purchaser

The prescribed wording for Ready, Willing and Able Purchaser in the Regulations means that the seller has to pay the estate agent the agreed fee if a buyer is introduced who is willing and able to exchange contracts, even if the seller changes their mind and does not exchange contracts. It does not matter what reasons are given by the seller for not exchanging contracts, the fee still has to be paid if there is a buyer who was willing to exchange contracts.

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013

These regulations give consumers a 14 day cooling-off period if the agency contract is signed in the home or any place other than the estate agent’s office. A cooling-off period is also required if an agency contract is signed at the initial market appraisal, or if the contract is subsequently signed in the agent’s office immediately after the market appraisal. However, ‘immediately’ is not defined in the legislation.

Where a cooling-off period is given, the agent has various options:

  • Start marketing and write off any expenses if the client cancels
  • Delay marketing until the cooling-off period has passed
  • Insist that all contracts for estate agency work are discussed and signed in the agent’s office.

Unfair Terms in Consumer Contracts Regulations 1999

Agency contracts should be fair and written in plain English to avoid being caught out by this legislation.

Categories: Residential Sales Best Practice