Seller Has to Pay Two Estate Agency Commissions

In the case of Nicholas Prestige Homes v Neal the Court of Appeal ruled that a seller, having sold her property via one estate agency, must pay another estate agency commission that would have been payable if her property had been sold through that agency.

Ms Neal had entered into a sole agency agreement with Nicholas Prestige Homes. A sole agency agreement means that only that one agent may market the property and thereby receive the commission. Ms Neal then sold her property through another agent during the period of the sole agency, while having failed to cancel those initial instructions. The Court of Appeal upheld the agency’s claim for breach of contract, in the sum of £10,883, representative of the commission it would have earned.

Most commentators are saying that the decision is not a particularly surprising one as Ms Neal was proved to have agreed with the Nicholas Prestige Home’s terms of business, along with a covering email clearly stating the period of the agreement. Those terms indicated that at the beginning of January 2007 the agents would be acting on a sole agency basis. In breach of that term Ms Neal went on to sell the property through a different firm of agents in March 2007. The Court of Appeal found that if Ms Neal had not breached the agency agreement then Nicholas Prestige Homes would certainly have sold the property to the same purchaser who eventually bought it.

Sometimes estate agents’ contracts include rights and benefits hidden in the small print, or which can be interpreted as giving agents entitlements for an indeterminate period of time. This was not the case for Ms Neal however, and the terms appear to have been clearly stated.

The sort of situation wherein a seller, in breach of a sole agency agreement, instructs other agents before determining the first agreement, was specifically referred to by Lord Neuberger when giving the lead judgment in a leading case called Foxtons Ltd v Pelkey Bicknell. He stated it would be one of the occasions when a person might be liable for two agency commissions.

Tim Butcher

Published on 21/06/2011