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14 November 2007

Estate agents and their claims have long been the subject of scepticism.

If false claims are made then although the net which can now catch agents includes the new Unfair Commercial Practices Directive (to be implemented Spring 2008) and the Fraud Act 2006, the Office of Fair Trading ("OFT") can also take action with a view to banning a person (including a company or partnership) from estate agency work. The ban comes in the form of a Prohibition Order.

"Banning" orders

An agent can be subject to a "banning" order for any of the following reasons:

  • Conviction of certain specified offences such as fraud, dishonesty or violence
  • By committing racial or sexual discrimination in the course of estate agency work
  • Failure to comply with the requirements placed on estate agents by the Estate Agents Act 1979 and its associated regulations
  • Engaging in specified undesirable practices
  • If an adjudicator finds that the agent is unfit to act as an agent

Real life examples

Low price for a quick sale

On 9 March 2007, an estate agent received a banning order from the OFT after he had been convicted of offences involving dishonesty. He was found guilty of two offences under the Proceeds of Crime Act 2002.

More specifically, the estate agent bought a property for less than a third of its value despite knowing or suspecting that the owners of the property had bought it with the proceeds of crime.

Ideal opportunity for renovation

In autumn 2007 two estate agents were made the subject of prohibition notices after being declared "unfit to carry on estate agency work generally".

One of the agents failed to tell a potential buyer that she was the owner of a property, which her agency was selling. She had not revealed the information, even when challenged by the potential buyer.

As a result of this omission, two directors and the company were found to have breached the Estate Agents Act 1979 in that they did not "disclose to a client promptly in writing, that they have, or are seeking to acquire, a beneficial interest in the proceeds of sale".

Sea view from some windows

Under the new Consumers Estate Agents and Redress Act 2007 ("CEAR"), which is expected to come into force in April 2008, the redress provisions require all estate agents to join a redress scheme approved by the OFT.

When implemented, the redress provisions will replace those in the Housing Act 2004 requiring estate agents in England and Wales to join approved redress schemes dealing with complaints about Home Information Packs ("HIPs").

Already 80 per cent of estate agents have joined the Ombudsman for Estate Agents scheme following the introduction of HIPs. Once the redress provisions of the CEAR are in force, any estate agent who does not join a redress scheme faces being fined and potentially banned from practising.

Estate agents must not only now work to a high professional standard but they must also be able to show by their records that their standards are top quality.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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