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The Conveyancing Committee has been made aware by practitioners that some of their clients have ‘signed’ contracts online for the purchase of property before seeking legal advice and that some were threatened with forfeiture of their deposit moneys when it was discovered that the title was not good and that the contract should not be completed.

It should be noted that the body responsible for the regulation of estate agents and other property professionals is the (PSRA), and it is that body that solicitors should contact in relation to specific complaints they or their clients might have in relation to any such cases.

The committee has always promoted its standard contract for sale on the basis that it strikes a balance as between the respective rights and responsibilities of a vendor and a purchaser in a conveyancing transaction. However, it appears that, in many online auctions, the standard contract is being altered to the extent that the balance of fairness has been shifted heavily against a potential purchaser.

Some of the matters that the online contracts for these sales typically include that are of concern to the committee are:

• The purchaser is bound to the contract terms and conditions when they click to buy, whether or not they have taken legal advice on the title to the property or on the terms of the contract itself.
• A 10% deposit is payable in order to secure the property in the online auction – this is not a normal booking deposit – it is a full contract deposit and is stated in the contract to be non-refundable.
• The online auction firm does not hold the deposit either as stakeholder or otherwise – it is paid over immediately to the vendor. It is not held by the vendor as stakeholder or in trust for the purchaser. There is no security given to the purchaser that the deposit moneys are safe or will be returned in the event that the contract does not proceed for any reason. This is not usual practice. Usual practice is that an estate agent takes only a booking deposit – not a full 10% contract deposit – and holds the booking deposit moneys on trust for the purchaser until a binding contract is in place, and as stakeholder after the contract becomes binding, and the booking deposit moneys are not released to the vendor until the sale has closed.
• The online auction firm takes its own fees out of the deposit moneys before it pays the remainder over to the vendor and before completion of the sale. This is not usual practice.
• The purchaser is required to nominate a person in the online auction firm to sign the contract on his/her behalf. There is a similar requirement for the vendor.

The committee has asked the PSRA whether it is their view that these practices are in compliance with regulations that the PSRA promotes and enforces. It has also asked the PSRA to confirm if it is satisfied that the practice of online auction employees acting as appointed agents or attorneys for both the vendor and purchaser in the same transaction is in order. The PSRA has also been asked to advise if there are any ethical standards set down by it or any regulatory requirements that would require that a licensee or its employees not to act for both a vendor and a purchaser in relation to any matter to do with a sale of property, including the execution of contract documents on behalf of both parties that bind them in contract. The committee will advise the profession of any replies it gets in due course.

The committee realises that there is little or nothing that members can do if their clients have already bought these properties by ‘clicking to buy’ online before they are consulted for legal advice. The committee would advise that solicitors direct their clients to the PSRA to make complaints in any appropriate case.