Case Study: AGENCY LAW AND PRACTICE

In the scenario where joint sole selling is carried out in real estate then the Estate Agents
Act 1979 comes in practice. The case provided will be reviewed in light of the Estate Agents Act
1979 and RICS professional standards and guidelines. In light of Section 18 of Estate Agents Act
1979, there should be a proper advance notification for the client about the circumstances related
to remunerations whether they are payable towards the agent in the form of calculations of
remunerations (legislation.gov.uk, 2019). Also, if it is any of non-remunerations, the client
should be notified about the payments such as advertising expenses with the inclusion of
estimated charge done from proper calculations. If the agent does not comply with the rules and
does not fulfill the requirements, the contract can be enforceable towards the client except by
order of the court (Section 18) (legislation.gov.uk, 2019).
Subsection 1 states that before any person (in this case, the reference is as “the client”)
entrance to the contract with another party (in this case, reference is as “the agent) where the
engagement of agent in the estate agent is on the half of the client, the agent should provide the
client with (Card, 1979):
a. Any information under the subsection (2) mentioned below, and
b. The additional information under the subsection which may be prescribed (4) discussed
below.
According to subsection 2, the client will be liable for the remuneration payment towards the
agent to perform any estate agency work under particular circumstances. The amount of
particulars carried by the agent’s remuneration for estate agency work or does not have any
specific time or information given, all should be managed under the remuneration calculations.
Any payment which is not related to the remuneration of the estate agency work or is not a part
of agents remuneration or pre-contract or a contract under the subsection (1) under specific
circumstances, the client will get the payables by agent or any other person involved for the
payments or may be payable (Card, 1979).
Subsection 3 states that if there is a contract between the client and the agent at any time in
the reference of subsection mentioned above, both the parties should have the agreement
regarding the contract terms which are related to the estate agency work and the payments under
the subsection (2)(c), the agent will provide the details of the client without any changes under
the time given in the statement, which was available for the client under subsection (1) before
entering into the contract with proper clearance over the payments being payable to the client
(Jowsey, 2014).
Duty of Care
In the given scenario the agents owe a duty of care to the owner of the flats. There needs
to be proper diligence, care and skill for the agents to work with the real estate agency and
should be according to the RICS professional statement management following the requirements
(RICS, 2016). It means that for the best outcome, there should be constant efforts to achieve
good results for the client and also staying under the limitations with maintaining the ethical
codes and understanding the market conditions too (Harris, 1989). If there is an interest in the
property, it needs to be presented in the form of writing promptly. There should be particulars of
the situation, which are involved in the decision or the related interest in the property. If multiple
agencies are working for the parties, then you have to respect the client equally and work in their
best interests with observing the situation and keeping the things transparent as much as possible.
There shouldn’t be any conflicts of interest as it can cease the activities for you or any other
clients you have in line (RICS, 2016). All the benefits should be disclosed in the best practice,
and you have to consult with the client by keeping their instructions in mind. Note them fully
with having detailed discussions and keep the instructions organized in the file.
When the property is also under another agency or some other buyer, you have to make
the clearance under any circumstances where they may have to make the payment to both agents
and should have it in the form of writing as well. Provide notice to the client regarding the dual
fee liability if the client (RICS, 2016):
 has contacted another agent previously to sell or use the same property under the joint
sole, sole agency or any other selling rights (see section 2.4.1.1 and refer to the glossary
for the definitions)
 instructed any other agency for the property during or after your agency or the buyer for
the sole selling rights using third party agency on a joint sole or sole agency basis (Estate
Agents Act 1979).
Misinterpretation
The case also follows the misinterpretation of the facts. The link could be developed with
the case of Smith v Land & House Property Corporation. In the case, the hotel was put up for
sale with the description that it was given on lease to a good tenant who took care of it. After
this, an agent was sent by the defendant to see the hotel, and he came back with a report which
stated that the person who was living in the hotel was not able to pay the rent and the whole town
was in a bad state because of neglect by the people. This report helped the defendant to close the
deal at £4700 for the hotel which was told that the property is no more than £5000 (Smith vs.
Land). Before the deal was going to be finalized, the tenant decided to sell all his property, so the
defendant backed off from the deal and claimed that the claimant gave wrong information about
the place and tenant.
Another thing which was brought to the attention was that the claimant knew what kind
of a person the tenant is. He did not claim about his good character out of giving an opinion, but
he knew his practice of doing different businesses, and still, he misguided the defendant. The
defendant claims that the claimant already knew about the rent the tenant had to pay, so the
assurance of his character was false (Smith vs. Land). The contract could be canceled therefore
because of the misinterpretation of the tenant's character by the claimant.
Part B
The current scenario in which the contract made between Mr. Oppenheim and the third
man involved in selling of the flats for Mr. Oppenheim depicts that the contract made between
the two parties is basically not accepted by the first party and according to the law of contract the
mutual consideration of both the parties is important for making the agreement but in this case
Mr. Oppenheim did not accept the terms mentioned by the third party in the contract and was not
signed recognized at the time of collection of due charges. According to the Estate Agents Act
1979 it is essential to inform the client about all the offerings in written form and must keep the
record of all the written document as evidence from your side for future so that client cannot
deceive and reject the all the offerings in future. But here in this scenario, this was the mistake
made by the Estate Agent that he did not keep any written evidence with him about the contract
and offerings and at the end of the sales he was informed that no offerings were accepted by the
client as no document was signed. The written document is highly important whether the
individual is a buyer, seller or the real estate agent because writing a contract between the two
parties identifies the acceptance of the terms and conditions of both the parties and writing an
agreement is quite a smart move before started rendering the services. The written document
includes all the information from the real estate agent about his terms and conditions and the
services he made and from the seller side regarding the fee he agreed upon and the terms and
conditions from his side (Weintrub, 2018). The written contract clarifies the position of both the
parties that become quite helpful in the future in case of breach of contract by any one party.
According to the law in the case of absence of written agreement between the seller and the real
estate agent, the seller can be termed liable to compensate the real estate agent with the
brokerage commission not depending on whether sales took place or not because he hired the
real estate agent as the third party and he is liable to pay his compensation for hiring him. The
best possible way to overcome such problems according to the law is to hire the legal body that
is a lawyer who could deal with the overall situation and can also help the two related parties in
settling the terms and conditions to avoid any breach of contract in the future by any party. The
presence of the attorney or the legal body can make sure that the agreement made is proper that
is beneficial for both the parties and is officially accepted by both the parties having the mutual
sign on the contract (Weintrub, 2018).
It is the total fault of the real estate agent because he rendered his services to the seller
without considering the legal document, but still, the seller is liable to pay off his brokerage fee
as per the law. According to the real estate agent section 18 of the law in this scenario through
the no written agreement is present between the seller and the real estate agent from the sellers
point of view but still seller is liable to pay off the fee and the commission to the real estate agent
and in case of any conflict with the terms and conditions the agent must be contacted to stop his
services and look upon the terms and conditions of the agreement during the contract period
(Banfield, 2005) In spite of this deceiving the agent at the end of contract when all the services
have been rendered by the agent comes in the breach of the contract from the seller’s side as he
is abiding the terms and conditions at the end of agreement period.
The value and the importance of the written contract must be understood by all the parties
making some deals and agreements because written contracts clarify the all terms and conditions
of the contract and all represent the mutual consideration of both the parties involved in the
contract that minimizes the chances of breaching the contract by any of the party. In case of the
breach of the contract, the written document mutually signed by both parties plays the role of
most strong evidence by the one party against the culprit that can make easy for the party to
defend its position.
Case Study: REPAIRS AND DILAPIDATIONS
Background
Repairs and Dilapidations problems usually take place in the case when the tenant is observed to
be breaching its leasehold compulsions in terms of generally violating the reinstatement,
refurbishing, renovation, and legal agreements. The Dilapidation schedule states that supposed
violations of the agreement and the existence of the proper remedies could lead to the legal
proceedings if both the parties are unable to resolve the issue on their own. There are two types
of Schedules present principally that is interim schedule and repair notes and these schedules are
served during the lease at any time and the second one is a terminal schedule that is served at the
time of expiry of a lease or also after the termination of the contract. Dilapidation is a
multifaceted and professional field. The assertions made by the parties can accurately be dealt by
the professionals possessing the key well-defined knowledge and expertise in leases, can better
understand the relationship between the property and its related laws and regulations, case laws
and RICS management notes on Dilapidations and its related code of behavior. However, the key
point is quite simple that a if the tenant is responsible for the violations then the landlord must be
compensated according to the rules set out in lease contract (DILAPIDATIONS, 2018).
Basic Principles of Dilapidations
In the case of dilapidations claims taking into account the damages to be paid, there is a need to
provide concerns to
1. Amount awarded according to the common law
2. The impact of section 18(1) of the Landlord and Tenant Act 1927 section 18.
According to the common law, the acceptable determination of the damage is the allocation of
the reasonable and proper cost for making the property into the state in which it was given to the
tenant, and it also includes the professional fee and the rent loss for the particular period of time.
Recently it is recommended that before looking at the effect of section 18, considering the cost
of works and equating it with damages in every case is quite basic and according to the common
law thought should be provided to a fact that whether it is practical for the petitioner to be firm
on getting the cost of restoration despite of reduction in the value of property due to the poor
condition caused by the tenant and also whether a payment should be collected, at common law,
the work that should be done by the tenants would have been outdated due to the renovation
made by the landlord (Quinn and Phillips, 1969).
 Section 18 aims to develop the legislative cap on the damages that is possible to recover.
According to this section “Damages for the violation of contracts or promises to make the
property restoration during the lease period or to make the restoration of property at the
termination period of lease, whether such contracts is spoken or implied, and if its general or
specific shall not exceed the actual due amount in any case by the value of deterioration of the
property and in such case the part is levied to the breach of the contract if it charges the extra
amount and in particular no payment for the damage will be demanded for the breach of any
such contract to leave the property in state of repair at the time of termination of lease (Dray &
Tozer, 2013).
According to the first limb cap of section 18, the competing values are considered that
demonstrates the scene of the hypothetical purchaser that he is ready to pay for the repair of the
property at the expiry date of the lease (Quinn and Phillips, 1969). That also demands the
reflection of the plan that the purchaser has for the related property. It is not possible in all cases
that the landlords plan must coincide with the purchase plan in the market at the date of valuation
because the purchaser looks at the premises from his viewpoint while on another hand the
landlord look at the premises according to his and landlord also wants the same condition of the
premises as it was handed to the purchaser, but the contract does not hold the same condition
from the purchaser side because of the depreciation with time of premises.
For the current scenario, two important plans are assumed that they may get in favor of both
the parties;
1. In fixation of the premises, the purchaser would not consider the repairing of the
premises economically suitable and wants to get the property in repair condition as soon
as possible (Edwards, Stell and Firn, 2014). But still the amount decided by the landlord
is quite high that according to the section 18 is not acceptable as per the law so the
condition of the premises and the legal surveyor will decide the actual cost that the
premises require to get back to the suitable condition and selling and purchasing contract
will be based on the report of surveyor.
2. The second assumption is based on the plan containing the three options 1. converting the
property in desirable shape by the purchaser, repairing of the property before handing it
to the purchaser and handling the property to purchaser instantly in out of way condition
to the purchaser (Lesar, 1960). The valuation of the property requires that both purchaser
 and landlord should agree on the one suitable condition by considering the law and
contract complications to make the effective and healthy contract that must be in favor of
both the parties without affecting any one of these in a negative manner (Roscoe, 2014).
As it is clarified by the law through section 18 limb one that charging extra
amount for the premises that need renovation more than its value is not acceptable and
the contract should be based on the hypothetical valuation that actually defines the
authentic value and acceptance of both the parties. The surveyor estimations are highly
important for both the parties because the actual value of the premises will be determined
on the basis of these estimations.
Inherent Defects
An inherent defect is basically the defect in the property design or design of anything that is
installed in or out of property premises including defective workmanship, defective material used
in construction, flawed supervision or anything defective used in making the asset (Bristows,
2014). The latent defect is easily detectable by the inspection but the inherent defect is quite
difficult to detect that is the reason that many times occupants consider them not liable for any
destruction or damage caused in the premises. The liability of the inherent defect is levied on the
repairing contract of lease by the occupants. Many occupants make sure to exclude the inherent
defects from the repairing contract to keep them away from any big liability. While on the other
hand, the very low percentage of landlords agrees to such terms and conditions because this
transfers the whole burden of damage in any case on them (Bristows, 2014). There is a need to
properly describes the agreements to avoid the disputes that could possibly take place in the
future while the interpretation of the agreement. The contracts must clearly identify the following
points to keep out the tensions in the future
1. If the occupant is liable for the cost of inherent defects
2. If the liability of the inherent defect of the new property should not be included in the
contract
3. If inherent contracts can possess the right to implement the building agreement
4. If the landlord possesses the defect insurance coverage for their property
The point can be explained by the related case where Nicholas has court claim against him
for damages and also the violation of the repairing agreement for the property he held by Mr.
Oppenheim but according to Nicholas the inherent defect in the property in the shape of poor
design he suffered a big loss and destruction (Mcgee, 2007). The main point, in this case, is that
the poor condition of the property is related to the physical condition that Nicholas possesses that
is required to be renovated and the questions related to inefficiency is ignored totally here. The
decorative repair only includes the destruction to the decoration while keeping the structure and
exterior of the house renovated the question comes who is responsible for that a landlord or the
tenant. The agreement involves the renovation and repairing of the structure of the exterior and
structure of the property rather than the decorations so before going into contract it is essential
for both the parties to clearly defines the liability that both of them possess and in case of any
structure destruction due to poor design it is the responsibility of the Mr Oppenheim to bear the
liability because it was he who opted for the structure and the material for constructing property
not the tenant but if the destruction is made to the physical existence of property then tenant is
liable who is holding and using the property for the repairing and to better investigate who is
responsible for the destruction a third party services can be hired by the court, in this case, to
clearly identify the culprit and made him liable according to the law. The contract made between
the two parties at the time of agreement is also essential to understand the nature of the contract.
Thus in the case of an inherent defect in the building that if there is a defect in the construction of
a building that is not damageable, that is no damage occurs due to that defect the occupants bears
no responsibility to eliminate that defect and the same point is supported by both UK and
Australia. And if damages have been recorded due to the inherent defect due to the fault in the
design or construction that may be due to the inappropriate material and supervision and as the
result the walls of building cracks due to defect in its foundation in such cases the laws of the
UK and Australia differs (Mcgee, 2007). The law of the United Kingdom states that the damage
in the building regardless of how it is caused, the renovation of the defected parts, not the whole
foundation will come under the covenant to renovate. This law basically deals with how the
damage is caused and who is responsible for the damage rather than the ground reasons for the
damage. Such cases when dealing in the courts are dealt as one-degree case and always
investigate about the degree of damage to measure the possibilities of the inherent defect or the
defect caused is due to the negligence of the tenants.
References
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Gazette
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publications/articles/inherent-defects-the-unknown-unknown-ed-glass-teresa-
edmund/#nogo
Card, R. (1979). Estate Agents Act 1979 (pp. 3-12). London: Butterworths.
DILAPIDATIONS. (2018). A Step by Step Guide for Landlords and Tenants. TFT
Dray,M & Tozer,S. (2013). VALUATION ISSUES IN TERMINAL DILAPIDATIONS
CLAIMS. Falcon Chambers
Edwards, S., Stell, P., & Firn, K. (2014). Dilapidations and Service Charge Disputes. Estates
Gazette.
Harris, N. G. (1989). Professional codes of conduct in the United Kingdom: a directory.
London: Mansell.
Jowsey, E. (Ed.). (2014). Real Estate Concepts: A Handbook. Routledge.
legislation.gov.uk. (2019). Estate Agents Act 1979. Retrieved from
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Lesar, H. H. (1960). Landlord and Tenant Reform. NYUL Rev., 35, 1279.
McGee, A. (2007). Inherent defects and the repairing covenant in commercial
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Quinn, T. M., & Phillips, E. (1969). The Law of Landlord-Tenant: A Critical Evaluation of the
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Roscoe, T. (2014). Dilapidations: Section 18(1) and a Landlord’s Subsequent Works. Retrieved
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v Land, S. House Property Corporation [1884] 28 Ch.
Weintrub, E. (2018). Should Buyers Sign Exclusive Agreements With an Agent? Retrieved from
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