Case involving a 'no sale' transaction

This case is about an unsuccessful attempt by a property owner to sell a property through Dhalia Central. I shall feature various excerpts from the correspondence exchanged:

I own a property on one tumulo of land in San Pawl tat-Targa. I decided to sell it through Dhalia Central Ltd. of 54, Birbal Street, Balzan, on an open agency agreement which my wife and I signed on March 8, 2000...

Dhalia brought their client, a seemingly keen buyer. A six-month konvenju was drawn up, read and signed in the presence of a notary on April 4, 2000, by which my wife and I were bound to sell, which was our intention. (Ray Sammut, March 18, 2002)

Unfortunately problems arose because the buyer was not in a position to pay the full amount agreed.

The buyer was unable to meet the target date by the end of September. Given our firm intention to sell, my wife and I extended the date on September 28, 2000. As we were still determined to sell, we extended again on October 13. (Ray Sammut)

Yet the sale did not materialise. This meant a further nine months of unnecessary inconvenience for the sellers. Their property was held up and they could not place it on the market. They had to enter into a bridging loan of Lm38,500 in order to, as Mr Sammut wrote, "be able to continue with our 'normal' life". Moreover, the prospective buyer lost his deposit.

Mr Sammut asked:

Did the company or estate agency know beforehand of the inability of their client to come up with the money? If it didn't, is the company liable for this service in view of the psychological and emotional stress we had to go through? (Ray Sammut)

Mr Sammut's letter was copied to Dhalia, who replied to him and copied me in:

Immediately on receipt of your letter, a meeting was held between us on March 21, 2002, at Dhalia's head office in Mriehel, both for me to have the opportunity to meet you personally and to discuss the matter openly.

First and foremost, after accessing our records and consulting with the branch involved in the transaction, we would like to confirm the sequence of events as stated in your letter.

You had engaged Dhalia to market your property and to introduce prospective purchasers with a view to obtaining a sale within the shortest possible time. The appropriate paperwork authorising us to do so was completed and signed. A copy was retained by you as the owner. Our standard agreement also states that, in the event of forfeiture, 10 per cent of deposits lodged are paid to Dhalia for services rendered, time involved and expenses incurred.

The referred to prospective buyer was one of a number of clients who viewed the property, and he expressed interest in entering into a promise of sale agreement. Negotiations were carried out on your behalf and in consultation with you, culminating in the signing of the preliminary agreement mentioned above.

As is customary, Mr Chetcuti made a deposit of Lm30,000 as a sign of good faith and to signify his willingness to complete the transaction.

Shortly before the preliminary agreement was due to expire, the prospective buyer requested an extension, which was granted by you and signed by the parties. A second extension was agreed and the prospective buyer again did not honour his commitment to sign the final deed within the stipulated time.

We are still in full agreement that the prospective buyer was the defaulting party in this matter and that the deposit of Lm30,000 was rightly forfeited in your favour - it is, after all, the reason a deposit is made in the first place.

However, we would beg to differ with the content of the last part of your letter. While being sensitive to the inconvenience and worry you have been caused, we must reiterate that Dhalia introduced the prospective buyer to your property and yourself in the utmost good faith.

To further reassure you, please do bear in mind that Dhalia operates on a success-based agreement and definitely does not mislead its clients in this manner. Dhalia truly made every effort to try and successfully conclude this deal, and we regret that this was not possible due to the prospective buyer's defaulting on his written commitment - at a cost to him of Lm30,000, after all.

We must stress that at no time were we aware of his intentions not to proceed with the sale and we genuinely do not feel that there was any breach of professional service as stated in your letter.

It is our understanding that you are concerned that the prospective buyer might institute further court action against you to try to recover the sum he forfeited. While still of the opinion that the Lm3,000 is due to Dhalia as agreed, we would be more than willing to guarantee a full refund to you in writing should any future court cases be decided against you. (Andrew Gatt, operations director, Dhalia Estate Agency)

Subsequently Mr Sammut had three meetings with Mr Gatt in which they discussed their respective differences. In the prevailing scenario, while bearing in mind that Dhalia's commission rate is 5%, why was the (albeit agreed on) amount to be paid to Dhalia 10%?

Isn't the regulation of specific sectors intended to protect consumers from finding themselves embroiled in such situations?

If estate agents were regulated, would such conclusions to such transactions be allowed? In transactions like the one referred to, would estate agents be legally obliged by the respective regulating body to assess the buyers' credentials and suitability?

Finally, it is worth asking whether the service which Mr Sammut bought from the estate agency was worth Lm3,000?

Address please

Mr Ivan Dimech, who sent us a letter of complaint, is kindly requested to send us his address.