It may come as a surprise to some property owners that estate agency fees are often payable regardless of whether a buyer is introduced by the agency concerned. A property investor found that out the hard way after the Court of Appeal found him liable to pay a £120,400 commission on the £6.8 million sale of a country estate.
The investor had agreed to an agency’s standard contract terms when instructing it to find a buyer for the estate. The latter had produced a marketing strategy report which also formed part of the contract. The initial plan was to market the estate with planning permission for residential development at an asking price in the region of £15 million.
The eventual purchaser of the estate was, however, introduced to the investor by a colleague, without any involvement by the agency, and the property was sold at the lower price without the benefit of planning consent. The agency took action to recover its fees after the investor refused to pay. A judge, however, accepted the latter’s plea that the commission would only have been payable had the property been sold with planning permission, in accordance with the original plan.
In upholding the agency’s challenge to that decision, the Court found that it was not an immutable requirement of the agreement that the agency would only be paid if the estate were sold with planning permission. The sale having been agreed during the currency of the contract, the agency was due its commission. The investor and his corporate vehicle, which had owned the estate, were jointly and severally liable to pay the sum due.