Bank disputes agent’s fee

Q I’m selling my house and the estate agent agreed a fee with me to sell my property. After some time the estate agent found a purchaser and is now sale agreed. At this point because this is a distressed property the bank got involved and is now disputing that the original 2.5% fee is too high and says it will only allow a lower amount. What should I do?

A You have not stated if this was dealt with under the MARP (Mortgage Arrears Resolution Process), or if the sale resulted in a pre-repossession voluntary sale process, and my reading of the letter is that it was not, as the bank only became involved after the sale was agreed. Most banks have a voluntary sales agreement which covers many items including the issue of the costs of the sale.

I presume that once you and the selling agent agreed the terms of the listing, you were requested to sign a PSRA prescribed form of engagement letter between you and the agent. This set out in a clear format both of your responsibilities; his to sell the house at terms acceptable to you, and you to pay him for the proper performance of his duties. The amount of his professional fee was agreed between you both at that point, and he is quite entitled to expect that agreed sum. In effect, this is a legally binding contract between you and the agent.

He has now agreed the sale of your house. On the other side of the coin, you are clearly in a work-out arrangement with your bank. The details of that settlement, whether there is a write-off of part of the debt, restructured repayments for the balance, etc, are not entirely relevant but it is fair to say that the bank had an expectation of the outcome. When your discussions were taking place with the bank, the bank should have made it clear from the outset the suggested professional fee levels, the most common being the agent, solicitor, fees relating to certificates of compliance, etc. If it did not make this clear, you were quite entitled to agree terms yourself.

You and the agent have a legally binding contract in place and should the agent choose, he could sue for specific performance of that contract, ie, the payment of his fee. Of course, no one wants to enter into an expensive protracted adversarial process, and I would hope to include the bank in that. If contracts for the sale of the property are signed, the agent’s position is quite strong. I presume also that your financial position will not lend itself to making good the gap between the bank’s suggested fee and the agreed fee. Perhaps with some discussion with the agent, he may be willing to compromise somewhat on his fee, but he is not under any obligation to do so and I believe that the bank should be made aware in writing that you have a legal obligation towards the agent. I do think with a little compromise on all sides, each party should be able to agree acceptable terms.

For people experiencing difficulty with their mortgages, MABS and the Free Legal Advice Centres (FLAC) have telephone helplines available and have excellent information online.

Edward Carey is a Chartered Residential Agency Surveyor and member of the Society of Chartered Surveyors Ireland, scsi.ie