Sourcing fees and misleading information
Resolution requested: Refund the sourcing feeAward: Refund the fee of £9,600Resolved by: Proposed decision
their offer to purchase a rent to rent investment property was accepted
they paid the agent a sourcing fee of £9,600 on the basis that the property was fully furnished and in reasonable condition
it transpired that the property required a minimum of £15,000 worth of refurbishments and there was only a minimal amount of furniture
they made the agent aware of the issues in the property after the management company had carried out their inspection
when the complainant chased the agent for a response, they were told that the landlord of the property was happy to cancel the agreement, based on the incorrect details
the complainant then requested a refund of the sourcing fee
after the fee was paid by the complainant, they provided the terms and conditions showing that the fee was non-refundable
the agent did offer to refund £3,600 of the sourcing fee to the complainant and would continue to search for a new property
Correspondence
Lease agreement
Deal sourcing terms and conditions
Bank statements
Photographs
1. The sourcing terms and conditions said that the complainant would:i. pay a fixed price in return for receiving details of potential property investment opportunities.ii. pay the sourcing fee upfront, which was non-refundable2. It appeared, on balance, that the terms and conditions were provided to the complainant after they paid the sourcing fee. Additionally, the instruction form provided before the sourcing fee was paid made no reference to the fee being non-refundable and while the fee was quoted on an area of the website as being non-refundable, it was not prominent.3. The terms and conditions did not confirm what would happen to the sourcing fee if the agent was responsible for breaching the contract or in what circumstances, the sourcing fee might be refundable.4. The agent misleadingly advertised the property using details such as “furnished to a luxurious standard”, “Gorgeous five bed detached property” and “FULLY FURNISHED – INCLUDING HOT TUB!” i. it later turned out that the property required refurbishment workii. the property was not fully “furnished to a luxurious standard”5. These were important factors which affected the complainant’s ability to make an informed transactional decision, as the agent had not provided all the correct material information.6. Additionally, in our view any transaction that does not have a cancellation process is fundamentally unfair and unenforceable.7. The agent completed the initial part of their service, by finding a property, negotiating the agreed price and then drafting documents. However, both parties mutually agreed to end their agreement as the landlord accepted that the property being provided was not as advertised by the agent.8. The agent is wholly responsible for what they advertise and must make sure the material information they are provided with by their client is correct. They should ask reasonable questions if they are unsure, such as what furniture was to be included in the sale otherwise, "fully furnished" and "luxurious" are misleading terms.9. While the agent told the complainant the fee could be transferred to another property, this would have meant they were committing to a project and not a specific property, with no option to pull out of the contract. This was found to be unfair.10. The case officer found it unreasonable and unfair for the agent to retain the sourcing fee, considering it was paid on condition that the property was furnished and in good condition.
When agents are advertising a property or providing other material information to interested parties, any fees must be clear, accurate and not misleading or omit any material information
Agents must understand that prospective clients will rely solely on the information they provide so must carry out due diligence to make sure it is accurate
A client must clearly be told the fees they are expected to pay, the circumstances which may make it refundable and the circumstances where it is not refundable
A consumer contract with no cancellation process is fundamentally unfair and unenforceable
For more information on what constitutes material information and how is it changing read here.
