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Inquiry Hearing Cases--A Selection II (Excerpts)

Failure to verify the legal capacity of parties

An estate agent, who failed to verify the legal capacity of the purchaser and arranged for the vendors to enter into a provisional sale and purchase agreement with a purchaser under 18 years of age, had her licence suspended for two weeks.

The estate agent acted for both the vendors and the purchaser as dual agent in this transaction. Before signing the provisional sale and purchase agreement, the purchaser had nominated her son and her friend to be the nominee purchasers. The purchaser's son was then under 18.

A few days later, the estate agent arranged for the parties to meet together to discuss the purchaser's request to delete the name of the purchaser's friend from the provisional sale and purchase agreement. The vendors agreed to delete the name of the purchaser's friend. As a result, the purchaser's son became the sole nominee purchaser of the property.

Subsequently, despite repeated requests from the vendors' solicitors, the purchaser refused to add an adult nominee purchaser to the formal sale and purchase agreement. Eventually the purchaser rescinded the purchase.

Having carefully considered the evidence and the representations made by the parties at the inquiry hearing, the Disciplinary Committee came to the conclusion that the estate agent did owe a duty of care towards the parties, and that it was an estate agent's duty to take all practical steps to ascertain the legal capacity of parties before letting them enter into a provisional sale and purchase agreement.

The Disciplinary Committee also took the view that estate agents are gatekeepers in the initial stages of property transactions where buyers and sellers normally entered into a binding provisional sale and purchase agreement before solicitors were engaged.

To ascertain that the contracting parties had full legal capacity for entering into a contract, an estate agent should check their identification documents, such as identity cards. Such basic knowledge of conveyancing and contract law was part of the syllabus of the practitioners' qualifying examinations. An ordinary estate agent should have no difficulty in following this practice, which demanded no special skills but prudence.

Taking into consideration of the fact that the estate agent had no ill intent in making the mistake, the Disciplinary Committee imposed a light penalty and suspended the estate agent's licence for two weeks.

Paragraph 3.2.2 of the Code of Ethics
Estate agents and salespersons should keep themselves informed of any laws, government regulations, essential facts and developments in the real estate market in order to be in a position to advise their clients in a responsible manner. They should strive to provide services and opinions based on knowledge, training, qualifications and experience in the real estate business.

Paragraph 3.4.1 of the Code of Ethics
Estate agents and salespersons, in engaging and accepting an appointment as an agent, should protect and promote the interests of their clients, carry out the instructions of their clients in accordance with the estate agency agreement and act in an impartial and just manner to all parties involved in the transaction.

 

 

 

 
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