A recent decision of the Court of Appeal has highlighted the fact that sellers may still be liable to agents for commission long after they have ceased to act.
Harbour Estates operated as an estate agent for the luxury apartments within Chelsea Harbour. Shamas Charania, the applicant in this appeal, put his property on the market through Harbour Estates, acting as sole agents, in late 2002 for a purchase price of £1.1 million.
There were numerous viewings throughout this period, including four viewings by a Mr Yazdani, who owned several other properties in the same development. However, the property was not sold and Mr Charania took it off the market in August 2005.
Shortly thereafter, Mr Yazdani’s niece approached a porter in the development to enquire whether there were any properties for sale. Mr Yazdani and his niece visited Mr Charania’s property, but Mr Yazdani did not mention the fact that he had viewed the apartment on several occasions previously. Because ostensibly there were no agents involved, Mr Yazdani negotiated a reduced price of £975,000.
On learning of the transaction, Harbour Estates pursued Mr Charania for their 2.5 per cent commission under the original agreement. Harbour Estates successfully claimed their entitlement to commission. Mr Charania appealed. The Court of Appeal held that Mr Charania was liable to pay the commission.
Both the court of first instance and the appellate court took a dim view of Mr Yazdani's actions. Although Mr Charania may now sue him, vendors should be extremely careful when conducting a property transaction under similar circumstances.