Key topic: Modern auction - reservation fee
Award
Refund the £3,000 reservation fee
What happened?
The complainant said:
- they paid a £3000 reservation fee, in two instalments, knowing they were committing to the purchase
- they kept the agent fully informed of their progress in sorting out the funding and received no replies
- the agent then advised them that the seller was withdrawing
- they believe they are entitled to a full refund, but the agent has refused
The agent(auctioneer) responded, saying:
- the complainant was the prospective buyer, who placed a bid to purchase the property online on condition that the purchase was exchanged and completed within 56 days
- the buyer appeared to be having difficulty sorting out their funding
- the seller then lost confidence that completion would happen and decided to withdraw
- while the reservation fee was non-refundable, they offered a 50% refund, which the complainant declined
What evidence was provided?
Communication
What was decided and why?
- The agent was responsible for showing they were entitled to keep the reservation fee, in line with their terms and conditions, and that these were clearly explained to the complainant.
- We were not provided with the terms and conditions and the buyer provided proof that they paid the reservation fee directly to the agent and not to the seller.
- There was no evidence that the fee was later transferred from the agent to the seller, making the agent responsible for any refund.
- The agent provided no evidence to support their statement and presented no reasonable reason why they are entitled to keep the reservation fee.
- The agent was found responsible for refunding the full £3,000 reservation fee to the complainant and was advised that they should claim the amount back from the seller, if it had been transferred.
How can you avoid this happening in future?
- Contracts should always be available to all parties and be clear and transparent
- All contract clauses should be fair and hoping to rely on a non-refundable clause is likely to be unfair
- Evidence is key to helping resolve issues and any negotiation where needed
Agents should:
- communicate to make sure all parties are kept updated and aware of their responsibilities and any consequences
- be able to account for the funds and who holds them
Our ‘Buying and selling at auction’ guide offers facts and help with understanding the types of auctions available, what to consider before deciding to buy or sell at auction and the pros and cons of each.
