Newsroom

UK estate agent warned by OFT

156/06    7 November 2006

The OFT has made a Warning Order against Darren Russell, the former proprietor of the estate agency and lettings business Homes Direct.

Mr Russell failed to disclose his personal interest in the acquisition of a property from a client, and his personal interest in the sale of his property to a purchaser. He thereby breached section 21 of the Estate Agents Act 1979 as well as the Estate Agents (Undesirable Practices) (No.2) Order 1991.

The OFT launched an investigation into allegations that Mr Russell had breached estate agents law following complaints from consumers. As a result, the OFT has advised Mr Russell that if he fails to comply again with an obligation under section 21 or engages again in the undesirable practice described, he will receive a Prohibition Order banning him from estate agency work.

Ray Hall, OFT Director of Services said:

'This case shows how the OFT will act to protect consumers and take appropriate action to ensure that estate agents meet their legal obligations.'

NOTES

1. The OFT can make a Warning Order if it is satisfied that a person in the course of estate agency has failed to comply with a statutory obligation or has engaged in a practice which has been declared undesirable by the Secretary of State. The OFT can bar from estate agency work a person who fails to comply with the Order and/or continues these undesirable practices in future.

2. Before a Warning Order is issued, the person concerned has the right to make representations to the OFT as to why the Order should not be made. If these representations are unsuccessful, subsequent appeal can be made to the Secretary of State for Trade and Industry.

3. An adjudicator appointed by the OFT determined that Darren Russell breached section 21 of the Estate Agents Act 1979 and the Estate Agents (Undesirable Practices) (No.2) Order 1991. A Warning Order was made on 25 August 2006. The Order did not come into operation until the period in which any appeal under section 7(1) of the Act, had expired. Mr Russell had until 22 September 2006 to lodge such an appeal.

4. After an Order has been made, the person affected can at any time, and on payment of a fee, currently £2,500, apply to the OFT for the Order to be varied or revoked. The OFT will then consider the request in the light of current circumstances.

5. The Estate Agents Act 1979 and related subordinate legislation covers anyone who, in the course of business, is engaged in 'estate agency work'. This means introducing to someone else a person who wishes to buy, sell or lease land or property, and being involved in negotiating the subsequent deal. The work must be in the course of business, whether as employer or employee, and as a result of instructions from a client. The land or property may be commercial, industrial, agricultural or residential.

6. Section 21 of the Act states that a person who is engaged in estate agency work and has a personal interest in any land shall not enter into negotiations with any person with respect to the acquisition or disposal by that person of any interest in that land until the agent has disclosed to that person the nature and extent of his personal interest in it. The duty to disclose is elaborated on in the Estate Agents (Undesirable Practices) (No.2) Order 1991, the effect of which is to declare as an undesirable practice a failure to disclose a personal interest promptly (i.e. within as short a period as is reasonably practicable in the circumstances, from the moment when what is to be done can reasonably be done) and in writing.

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