HIP Complaint: Ombudsman Warning to Estate Agents

Hidden HIP fee dispute

Submitted by: MikeC (Admin) on 25-May-08 06:12:31 PM

I don't know whether I just missed this or it was so low-key no one noticed.

According to its annual report for 2007, published 10th Mar 2008, the Ombudsman for Estate Agents (OEA) saw fit to highlight a formal complaint - the first received - from a home seller disputing payment for a Home Information Pack (HIP) they believed to be free.

It would appear the estate agent invoiced the vendor for the HIP after its services were terminated.

The story is typical of those already circulated within the DEA community: home seller responds to 'free Home Information Pack' advertisement; signs up with estate agent but is not advised that the HIP becomes payable if agency is terminated.

In a clear message to its members, the OEA signaled it would likely rule against estate agents not covering themselves adequately:

if a seller is charged for a HIP on disinstructing an agent, but the Pack was advertised as free and the seller’s understanding that it is a free pack is on the basis that there was nothing advising him that a charge applies if he disinstructs the agent, I am likely to find against the firm. [sic]

It's interesting to note that the case is highlighted despite only recently being lodged earlier this year, thus falling outside of the 2007 reporting period.

Bury it in the small-print

However, although the report does not reveal its ruling, it does hint strongly that it will actually rule in favour of the estate agent in this particular case:

[If] the seller claims he was told the pack was free, and has no evidence to support that, but the agency agreement is absolutely precise about the conditions under which a charge for the Pack applies (and these are the circumstances now presented to me) then I am going to uphold the contractual position.

The OEA further stresses that 'disclosure at the point of sale is vitally important (whether HIP specific or otherwise)', but stops short of clarifying whether it would rule against members if they didn't, nor whether advertisements should disclose the condition.

The 'best approach', the report advises, is to ensure a clause exists within the agreement.

Interpretation

What constitutes "disclosure at the point of sale", then?

The Ombudsman makes clear he would not side with home sellers if they can not prove they were told the HIP was free.

Quite.

With plenty of homes still offered to estate agents for marketing, but few buyers able - or willing - to purchase, there is clearly room for unscrupulous, or desperate, agents to simply bury the clause within small print and say nothing (accept that it's free, of course), hoping the vendor doesn't read it any time soon.

After sitting tight for a while (in a slow market, don't forget), a tempting opportunity to churn (billable) sellers presents itself.

The Ombudsman could at least demand, in the interests of home sellers and fair-play, that estate agents disclose applicable termination fees within advertisements.

Posts: 8

Hidden HIP Fee
Reply #1 on : Mon May 26, 2008, 11:39:15

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I was taught never to rely solely on verbal assurances. Always insist on a formal written contract and be sure to read and understand it before signing it. If you have any doubts about it get your legal eagle to check it. A reputable agent would not have any problem with this.

That being said I spent 35 years as a Business Transfer Agent taking sales instuctions from several thousand sellers around 90% of whom did not read my agency agreement even though I asked them to do so.

While a certain amount of legal protection may be needed it is upto Joe/Joanne Public to act responsibly as well.

admin
Posts: 3

Re: Hidden HIP fee dispute
Reply #2 on : Mon May 26, 2008, 16:44:01

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I hear what you're saying, John, but what we're dealing with here is a key condition tied to a service/product advertised as free.

Under the Database Protection Act, for instance, a company is supposed to flag-up important "headline" clauses at the point of submission. Similarly, the finance industry has to disclose the AER interest rate etc... in adverts.

Who amongst us, in all honesty, read every single clause in every agreement we're asked to agree to?

Software licences?
Online forums?

These days, we're bombarded with them; how about the sneaky updates within bank statements and phone bills etc...?

I contend that if anyone actually sat down and read a credit card agreement or mortgage - and understood it - no one would sign them unless under duress!

Posts: 8

HIP Fee
Reply #3 on : Tue June 10, 2008, 14:22:48

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We recently had a EA around as we was thinking of re mortgaging and want the free evaluation that they offer. We was given a value and told him we was not selling and after 45 mins sweet talk he had managed to get us to sign and put the house up for sale. We was told about the HIPs pack and that the charge will be taken when we sell the property or in 9 months. 6 days later we thought what the hell are we doing and called the EA to say we are not selling.
A few days later we had a letter through telling us that we need to pay the £450 for the Hips pack. How can this be?

admin
Posts: 3

Re: Hidden HIP fee dispute
Reply #4 on : Tue June 10, 2008, 14:43:23

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John - You may be protected within the Distance Selling Act which, if I recall correctly, gives you 7 days cooling-off period.

Posts: 8

HIP
Reply #5 on : Fri September 05, 2008, 09:25:51

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we paid last september up front for a hips which we never got till we finished with agent 4 months later it took that long they said

they now admit they forgot to take the payment a year ago and now threatening legal action

how do i stand i do not even deal with the card i paid on then

admin
Posts: 3

Re: Hidden HIP fee dispute
Reply #6 on : Fri September 05, 2008, 14:41:21

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Hi Carol

4 months! Unless there were complications with Land Registry, Local Authority searches or the like (which you should be able to find out from the dates on the documents within the HIP itself), then it would appear they have failed in their duty to both supply, and make available, the HIP in good time.

Of course, on the very limited information you have supplied, it is not possible to say advise anything definitively (and I'm not a lawyer), but should they have failed in their duty then they are liable to £200 penalty.

More worryingly, for them, if they are fined, they will automatically be reported to the Office of Fair Trading.

Last year, many estate agents were allegedly flouting the HIP laws by delaying their procurement until the last minute - as your story suggests. Therefore, it could be the case that you are not alone.

If trading standards discover other cases, they are liable for each one but... the OFT have powers to close them down if they feel they are repeatedly and deliberately trading illegally.

Coming after payment a year later is, I would suggest, a contract issue between you both.

You may have leverage in making a counterclaim for breach of contract on the basis that they failed to fulfil their agreement to supply the HIP, as per the regulations. Threaten to report them to the trading standards and the local press (chances are you are not alone and they are trying it on because times are tough - they won't want all clients knowing).

Remember, I'm not a lwayer.

More info: http://www.energy-performance-certificates.org/epc

Good luck

Posts: 8

new hip pack
Reply #7 on : Mon March 09, 2009, 20:35:34

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Hi just a small query.We have had our property up for sale for almost a year with no sign of it moving.Where exactly do we stand if we want to take it off the market and instead rent it out for a while.Am I correct insaying that if you keep your house on the market contantly even if its for three years can we use the same hip pack, but if we take it off the market,rent it out for a year then put it back on the market ,we need another hip pack. can you help as this sounds like a flaw in the law.

Posts: 8

No EPC's
Reply #8 on : Wed March 11, 2009, 11:48:37

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Agents disclosed in the following link blatantly ignore EPC requirements. Should we stand by and allow this to happen. Furthermore, the agents disregard the required membership to an Ombudsman. (how can this be allowed?)

http://blogs.mirror.co.uk/investigations/2009/01/grief-from-commercial-sales-ag.html

Posts: 8

HIPS balance of payment
Reply #9 on : Tue October 12, 2010, 14:07:38

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Hi,
I was wondering if I am obliged to pay the balance of the HIP's pack cost if I take my house off the market now that HIP's have been scrapped ?
I originally paid Connells £99 for the HIP as I went with their solicitors - Shoosmiths, but in the small print it says I have to pay the balance of £399 if contract is terminated ! (Note original contract was for 20 weeks and I have not signed anything since)
The HIP for my property was prepared last November 2009 and we have not managed to sell property so we are thinking of 'calling it a day' and staying put but I don't feel it is fair to have to pay balance especially as the Hips pack is now finished and overall £498 in total is/was a very expensive HIP's !
Appreciate your advice
Regards
Mark Coleman

Posts: 8

Re: Hidden HIP fee dispute
Reply #10 on : Sun October 24, 2010, 17:34:58

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Hi Mark

I would be interested to know how you are getting on as I am in a similar position. My understanding is that the £99 I paid was for the EPC. If, indeed the HIP was carried out, I have yet to see it but appreciate that a fee would be due but not in the excessive amounts being requested!

I intend to remarket my property in the next few months but do not feel inclined to put it with Connells as I feel almost blackmailed into doing so.

Have you actually seen your HIP?

Regards

Heather

Posts: 8

HIP
Reply #11 on : Thu December 30, 2010, 23:25:41

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I signed for HIP back in February 2010 with delayed payment, however the property has not been sold & is now off the market. I am now being chased for £550 for HIP which I never received or seen, can anyone tell me where I stand