Estate Agents Professional Indemnity - Are You Communicating Clearly?

Estate Agents Professional Indemnity - Are You Communicating Clearly?

The advent of Agents Mutual and their “OnTheMarket” portal is set to shake up the property world.  The contractual requirement for Estate Agents utilising “OnTheMarket” to market properties online via only one other portal is controversial and a source of huge debate across the property community. 

In reality, the end client will decide how the online market develops and which portals will succeed.  However, one angle which many agents may overlook is the Insurance perspective, it is important to understand how an Agents actions could impact their susceptibility to Professional Indemnity Insurance claims.

Property Experts Owe A Duty Of Care

As a trained property expert, an Estate Agent owes a heighted duty of care to its client for the advice and expertise provided.  The onus is therefore on the Agent to act in a professional and transparent manner in the services they provide. 

Should a client feel that the services or advice provided may have breached that duty of care, and in turn they have suffered a financial loss, they are likely to pursue a Professional Liability claim against the Agent.

How Can Portal Changes Breach Duty Of Care?

In simple terms, a client will engage an Estate Agent to sell or Let their property.  In exchange for an pre-defined fee, the Agent will market the property and manage the sales process – alongside other agreed activities.    

In itself, the marketing restriction to two portals, and by definition not marketing via one of the two current market leaders, is not likely to be perceived as a breach of professional duty.  However this is on the assumption that the marketing process has been fully explained to the client and the same is reflected in the Terms of Business / engagement and the contract between the Agent and the client.   If this doesn’t happen, the client could argue that restricted marketing has in turn restricted their ability to sell or let their property.

What Types of Losses Could be Challenged?

Whilst no precedent currently exists, should a property remain unsold and, for example, the seller loses fees on another purchase which falls through, they could sight the lack of information around restricted marketing as a probable cause and look to the Agent for financial compensation.

Transparency Is Key

As long as the marketing process is fully explained in a clear and transparent manner, the contractual terms of acceptance will be much clearer, staff should be armed with answers to questions relating to the background and reasoning so that the client can make an informed decision about their choice of Agent prior to instruction.

Other Areas of Consideration

#1 Documentation

On and offline documentation should be reviewed to ensure terms and conditions have been updated.

#2 Logos

If the Agent is no longer dealing with a specific portal, they could find themselves in breach of copyright if the portals logo is still shown online or via any marketing material. 

#3 Existing Instructions

For properties which are currently being marketed and may be removed from a portal, it would be best practice to re-engage with the client to explain any potential changes and gain their acceptance.

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About the Author

Jon Norman

I’m passionate about family, sport, technology and business.

In fact, I have always been fascinated by business, whether it was running the school tuck-shop or my Saturday job in the local store, I was always looking for ways to improve or view things differently.

I have enjoyed an amazing career fast approaching 25 years in the insurance industry, which has given me real insight into the challenges and opportunities faced by SME businesses in today’s ever-evolving marketplace.

I co-founded Insync Insurance, to offer companies a new way to buy and manage their business insurance. A synergy of digital servicing and personal expertise - utilising the latest technology to enhance relationships, not to replace them.