The British dispute resolution body The Property Ombudsman has directed a property firm to issue a full refund of a buyer fee amounting to £4,000. In addition to reimbursing the upfront fee paid, the firm must also provide financial compensation to the affected purchaser. The ruling arises from the intermediary's failure to properly verify essential information regarding the mortgageability of the investment property in question.
The dispute flared up over the fact that the purchased property subsequently proved impossible to finance via a standard mortgage loan. The property firm had refused to refund the buyer fee, citing contractually stipulated deadlines for reimbursement claims.
Duty of care outweighs contractual deadlines
The Property Ombudsman rejected this line of argument. The ombudsman ruled that an estate agency cannot rely on contractual time limits to resist repayment claims where the issue stems directly from its own negligence. Omitting to verify material facts constitutes a direct breach of disclosure and duty-of-care obligations.
The determination sets clear benchmarks for transactions involving investment assets and underlines the responsibility of agents and platforms prior to contract execution. The key points of the ruling include:
- —A full refund of the £4,000 buyer commission charged
- —The obligation to pay additional compensation for the inconvenience incurred
- —The finding that standard contractual deadlines become void in the event of failures concerning fundamental property features
Signalling effect for the UK property market
The ruling demonstrates that contractual clauses offer no shield where elementary characteristics of an asset have been misrepresented or left unverified beforehand. For commercial brokers of investment properties, the case highlights the substantial liability risk that arises when the financeability of a property is insufficiently clarified prior to the sale.
