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Agents’ duty of disclosure – What to do when you are asked to ‘hide’ a repossession

ON THE MARKET

At the TPO Office we receive many queries from agents seeking advice on what to disclose in property particulars.

The TPO Codes are quite clear that material information must be disclosed to potential buyers and tenants at the earliest opportunity.

However, this is not always straightforward for agents when taking into account instructions received from sellers and landlords.

One recent query concerned whether or not to disclose that the property had been repossessed. This is clearly material information to any consumer. and therefore under the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the TPO’s Codes, the information must be disclosed.

The seller in this case was a corporate body. The seller’s instruction to the two instructed agents was to not only remove the reference to the property’s repossession status, but to physically remove the black and yellow hazard tape from parts of the building before photographs were taken and then replace the tape.

The seller insisted that the repossession status should only be disclosed to a buyer after they had made an offer.

The agents’ response was to point out that these instructions put them in breach of not only the TPO Code but also the CPRs, leaving them open to prosecution. Furthermore, one agent explained that it was simply not fair to withhold this information as, on a practical level, buyers of repossessed properties were often inundated with debt collection letters for years after.

The seller maintained that the property should be marketed as per their instructions despite being made aware that they were asking agents to breach regulations. Both agents lost the instruction, as they were not prepared to follow the seller’s instructions, and out of sheer frustration contacted my Office.

Repossession companies do not fall under the jurisdiction of TPO. However, where an agent is losing business through their determination to comply with regulations and to provide a fair service, this is clearly a matter of great concern.

Perhaps even more concerning is that the only reason that a seller can insist that an agent withholds material information is that they know some agents will agree to do so to gain the instruction.

So how can problems such as this be addressed to ensure that compliant agents, wanting to do the right thing, are not disadvantaged?

Whilst TPO has a duty to feedback matters of best practice and emerging issues to the industry and its regulators, Ombudsman schemes can only accept complaints from consumers – this is defined under the Government’s various approval criteria for redress schemes.

Trading Standards and other official bodies such as the Competition and Markets Authority and the Advertising Standards Authority are not limited to consumer complaints.

Putting aside the debate about enforcement resources, the fact remains that where the industry can collectively present a persuasive case for action to be taken, resources are likely to be made available.

The problem of portal juggling is a case in point. The practice is not yet eradicated, but the fact that it is being addressed in the first place is because concerned agents came together to raise the issue and push for action to be taken.

So the message is simple.

The more the industry can put aside its internal differences and come together to publicly highlight problems which disadvantage both consumers and compliant agents, the closer the industry will get to achieving a level playing field.

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Source:: Agents’ duty of disclosure – What to do when you are asked to ‘hide’ a repossession