Something more than a 'jail them all' response is needed if we want to consider the legal status of auctioneering, writes SARAH CAREY
‘DO YOU really want to be a poster girl for auctioneers?” a friend asked at the weekend. Not particularly, and yet there is more to be said. One could summarise the reaction to last week’s defence of auctioneers as “Jail them all”. Given the consensus, it’s probably worth taking a closer look at the industry. If we are to lock them all up, it’s best to know how these parasites of the property boom work so we can catch them at their nefarious and apparently widespread misdeeds.
There’s good news and bad news. The bad news is we can’t jail them, because they haven’t broken any law. How can I possibly say that? Easy. There is no law. More of that later.
What about the good news? Or what some of the self-proclaimed victims of auctioneers might see as good news. Times are tough, and real estate casualties are growing. Last week, Hassett Estate Agents, based in Enniskerry and Greystones, closed for business. It could be the first of many agencies that will shut down as the market collapses. If you bought a house through Hassett’s and had paid them a deposit, I imagine you’d be rather anxious to know the current location of that money. Hassett’s may have returned all deposits prior to closing, but if they haven’t, customers are left with a lot of questions.
Is their deposit safe in the client account? Is the client account empty? If so, can you get your money back? Who do you call to find out? Hassett’s is a member firm of the Irish Auctioneers and Valuers Institute, of which my most esteemed brother is the current president. In 1977, the IAVI set up a voluntary fund to compensate people who find themselves in just this predicament. Clients of Hassett’s or any other member firm that collapses should get in touch with the IAVI and claim the deposit from them.
Like all organisations, the IAVI has splitters. The Institute of Professional Auctioneers and Valuers (IPAV) also has a voluntary fund protecting customers’ deposits. Please note that I’ve had to use the word voluntary twice. There is no compulsion on auctioneers to join either organisation, nor is there any obligation on either institute to maintain the compensation funds.
In contrast, solicitors are required by law to contribute to a fund to compensate clients for money lost through legal dishonesty, though not negligence. By volunteering to build and maintain a compensation fund, the IAVI and IPAV should get a little acknowledgement, rather than a stream of abuse.
What happens if you paid a deposit to an auctioneer who is not a member and he goes under? The minimum legal requirement is that an auctioneer should get a licence to practise from the District Court. The licence requires the holder to be in possession of a High Court Bond amounting to €12,700 – a figure set in 1973 as IR£10,000 and unchanged since. What that means is that the total amount available to compensate short-changed clients is €12,700. Since costs would generally be allowed, the bond would barely cover two clients who’ve each paid deposits of around €5,000. Hassett’s had no such bond for 2009, and if it wasn’t for their 2008 membership of the IAVI, clients who paid deposits would have nowhere to go.
Even this minimal licensing system is barely enforced. Anyone can set up business simply by printing some business cards and declaring themselves to be an auctioneer. SWAT teams can’t show up and shut them down. Instead, a small fine is imposed. Over 10 years, 39 auctioneers were fined a total of €18,500. That’s less than €500 each.
Given this rather loose approach to regulation, it makes you wonder why firms bother joining the IAVI or IPAV at all. Membership requires degree-level qualifications, continuing professional development on pain of expulsion, membership fees and compliance with codes of conduct. Firms could practise either with or without a licence – certainly without institute membership – and not worry about the slightest interference from the State.
Now back to the bad news, and a wonderful Irish twist in the tale. After 10 years of the biggest property boom in our history, Ireland is an unregulated auctioneering free-for-all. The institutes self-regulate, but find it extremely difficult without any statutory basis for their rules. The Department of Justice has established a body called the National Property Services Regulatory Authority. It has offices in Navan, Co Meath, that were officially opened in November 2007. The NPSRA has a website. It has staff. It has everything you need in an authority except – oh dear – authority. The Government never passed the legislation giving effect to the body. They haven’t even published the legislation. The staff in the NPSRA seem terribly nice and they are busily working out how they’ll regulate once they, em, become the regulator.
Isn’t it fabulous? The IAVI and IPAV have been down on their knees begging for regulation for years so that bad practice can be effectively disciplined. The Government refuses to legislate but sets up a regulatory authority that has no authority. Different arms of the State, from the Revenue Commissioners to the OPW, employ auctioneers on a daily basis to perform valuations and sell off State property. Then that very same State condemns those same auctioneers as being unfit to work for another arm of government – the National Asset Management Agency – because they aren’t regulated.
It’s all too much. Has the Banana Republic joke run out of steam yet?
