i-law

Professional Negligence and Liability

Chapter 8

SURVEYORS, VALUERS AND ESTATE AGENTS

I. INTRODUCTION

1. Surveyors and valuers

8.1 This chapter deals with the professional responsibilities of those whose work involves the inspection, appraisal and marketing of land and buildings, often including a report to a client on their condition and/or value. It is not concerned with certain other persons who may also be called “surveyors” or “valuers” but whose expertise relates to other kinds of property, such as ships, shares or chattels.1 Although the professional duties of such persons might well be regarded as similar to those involving land and buildings, there has been little or no attempt in the case law to draw potentially useful analogies.2 8.2 There are no general statutory controls upon surveying or valuation, in the sense of minimum entry qualifications or membership of a particular professional body. However, valuations for certain purposes (such as the commonest form, namely for lending purposes) must be carried out by a person who holds a designated professional qualification. The majority of those who carry out surveys or valuations of real property are members of the Royal Institution of Chartered Surveyors (RICS), designated “MRICS”. Membership of this body, which permits use of the appellation “chartered surveyor”, requires both academic qualifications3 and a period of practical experience, the latter culminating in a formal assessment of professional competence. 8.3 Thereafter members of RICS must abide by a code of core professional and ethical standards,4 which sets out the standards expected of members of RICS. Those standards include a requirement to act with integrity, to avoid conflicts of interest, to avoid situations which are inconsistent with their professional obligations, and to comply with the RICS’ requirements for continuing professional development (CPD).5 8.3.1 The RICS Charter and Bye-Laws permit the RICS to make its own rules, as to the use of its disciplinary powers and procedures.6 A suspected contravention of the RICS Rules of Conduct will first be investigated to establish if there is a need to protect the public or uphold professional standards by taking disciplinary action. A less serious breach (which is admitted) may be dealt with by a Regulatory Compliance Order/Consent Order. If there are no admissions, the matter may be referred to a Single Member of the Regulatory Tribunal. The more serious cases will be referred to a Disciplinary Panel. If the charge is proved before a Disciplinary Committee, in addition to the fixed penalties for more administrative breaches, and cautions or reprimands for less serious breaches, the Disciplinary Committee also has recourse to the sanctions of: removal of registration of a firm or expulsion of a member from RICS; conditions could be imposed on continuing practice; the member may be required to give an undertaking, or receive a reprimand or caution, or be fined, as well as costs. From this decision there is a right to appeal to the Appeal Panel.

2. Estate agents

8.4 The essence of estate agency may be defined as work carried out in order to secure the introduction of one person who wishes to dispose of an interest in land to another person who wishes to acquire such an interest.7 Notwithstanding the name, it appears that estate agents are agents only in a very limited sense: “Estate agents as such have no general authority to enter into contracts for their employers. Their business is to find offers and submit them to their employers for acceptance.”8 In consequence, unless specifically authorised,9 such an agent is unable to create a contract of sale10 or lease11 which will bind the client. This is certainly the case where the agent is instructed to find a purchaser or a tenant; where the word “sell” is used the position is less clear.12 It appears moreover that, even where an estate agent is authorised to make a contract, this can be no more than an open contract; to negotiate special conditions would require specific authorisation from the client.13 8.5 The one aspect of estate agency work in which the agent has implied authority to affect the client’s legal position relates to the task of describing the property to be sold or leased. It appears that a misrepresentation made by an estate agent will be treated as emanating from the vendor, except where a contract term or notice explicitly denies that the agent is authorised to make such a statement,14 and may thus entitle the purchaser to rescind the sale15 or claim damages under section 2 of the Misrepresentation Act 1967.16 Losses incurred by the client in this way may be recovered from the agent as damages for breach of duty.17 8.6 The principal statutory provisions and regulations affecting estate agents are: the Estate Agents Act 1979 and the Consumer Protection from Unfair Trading Regulations 2008 (known as “the Unfair Trading Regulations”).18 The Estate Agents Act 1979 introduced a form of statutory control in this area, by conferring upon the Director-General of Fair Trading extensive powers to investigate and ultimately to ban from practice unsuitable individuals or firms. As part of this regulatory process, the 1979 Act and secondary legislation made under it impose a number of detailed controls upon the way in which estate agents conduct their business. The UK’s regulator for estate agency work is the National Trading Standards Estate and Letting Agency Team (NTSELAT). The remit of the NTSELAT is to assess whether individuals or businesses are fit to carry out estate agency work within the terms of the Estate Agency Act 1979. Any alleged breach of that act would be investigated by Trading Standards officers. 8.6.1 However, it is notable that, with very few exceptions, the only sanction for a breach of these obligations lies with the Director-General or the regulator - they confer no civil remedy upon clients or other persons with whom an estate agent may deal.19 One such proven exception is that the principal (vendor) can rely upon the statutory provisions of the Estate Agents Act 1979 to reduce the commission agreed as payable to the agent, where the agent has failed to comply with the requirements of s.18 of the Estate Agents Act 1979: see the Supreme Court’s decision in Wells v. Devani.20 8.7 Estate agents are not required by law to be licensed or formally qualified in order to practise estate agency. There is no professional “closed shop” in the sense of entry qualifications or other restrictions upon the right to practise. However, many agents are in fact members of a professional organisation, of which the largest are the Royal Institution of Chartered Surveyors (RICS) and the National Association of Estate Agents (NAEA).21 Each of these bodies offers various routes to membership and professional qualifications. Each also imposes Rules of Conduct upon its members, backed up by disciplinary sanctions. Estate agents that engage in residential work must also belong to an approved redress scheme, of which there are two: the Property Ombudsman and the Property Redress Scheme.22 8.7.1 In addition to these general rules for professional conduct, The Property Ombudsman (TPO) issued substantially revised Codes of Practice, effective 1 June 2019, for residential sale and lettings agents in England, Wales and Northern Ireland.23 The new codes of practice followed extensive consultation with NTSEAT, NAEA, Association of Residential Letting Agents (ARLA), the Ministry of Housing Communities and Local Government (MHCLG), Chartered Trading Standards Institute (CTSI), and many other specialist organisations and individuals. 8.7.2 Those estate agents who are members of RICS must also comply with RICS Professional Statement: UK residential real estate agency.24 The RICS have expressly stated the intended force or effect of its published Professional Statements:

“RICS professional statement

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