An agent whose business went under owing over £90,000 to landlords, tenants and contractors has been fined £3,000 by magistrates.
She has also been banned from being a director for five years and must pay £2,000 costs.
The penalties have angered her creditors, who had expected the case to go to crown court.
Sharon Price, an NAEA member, of Price Properties in Huntingdon, Cambridgeshire, had not kept client money separately, kept inadequate records and ran her business in a “chaotic and shambolic” way.
On Tuesday, she pleaded guilty to two charges of contravening the Consumer Protection from Unfair Trading Regulations, and Business Protection from Misleading Marketing Regulations, between January 2009 and February 2010.
While more than £90,000 had to be paid back to landlords and tenants of Price Properties via the NAEA insurance scheme after the company went into administration in February 2010, the company’s full liabilities remain unknown.
Prosecutor Mike Magee said Price, 49, had “singularly failed” in her duties to her clients: “Ms Price held herself to be a competent and professional estate agent. It is the prosecution case that she was neither of those.”
Rent was not passed on to landlords and deposits were not ring-fenced in separate accounts, the court heard.
On occasion, payments to landlords were authorised only to be cancelled by Price the following day. Some landlords received no rent throughout the whole of 2009, despite their tenants paying on time and in full.
Tenants who had paid deposits did not have them repaid when their tenancies came to an end.
Despite concerns being raised by a staff member in the summer of 2009, she believed she could trade her way out of the situation and continued to take new clients until January 2010.
Mr Magee said: “Given the absolute absence of financial controls and financial training, the mess the company was in is unsurprising.”
He added: “By her mismanagement, negligence and lack of professionalism, she caused those losses to the landlords and tenants who had placed their trust in her to negotiate their finances.”
Kevin Warboys, mitigating, said Price admitted mismanaging the company finances “disastrously” but had made no personal profit, and that her membership of estate agency bodies had allowed many creditors to reclaim their losses.
He added that Price herself was the business’s largest creditor, owed £83,500, and that her marriage had broken down in the past year.
One of her creditors, contractor Mark Shipley, carried out decorating work for Price Properties just before the company went into administration and was owed £1,800.
He said: “At the point she contracted me in January, she knew full well she was going down the pan.
“I’ve had to write that money off and put it down as a lesson learned. Meanwhile she’s come out of this smelling of roses.”
* The Editor of Letting Agent Today wishes to thank the local paper, The Hunts Post, for its help and professional co-operation with this report, following the refusal of Huntingdon Magistrates Court to give LAT any information as to how Price pleaded, what the charges were or what penalty was imposed. The court cited the Data Protection Act.
The Hunts Post report is at: http://tinyurl.com/6dy94hs
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Comments
Typical Magistrate with no bleedin idea make a derisory fine and then has the gall to hide behind the data protection act. Its laughable.
Thanks RealLets - I stand corrected ! Thats what you get for not looking things up and doing it from memory.
Ian
As this is an Estate Agency website so best to the facts absolutely correct. The sanctions are actually:
The court must also order the landlord to pay to the applicant a sum of money equal to three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order. [rent is immaterial]
If section 213(6) is not complied with in relation to a deposit given in connection with a shorthold tenancy, no section 21 notice may be given in relation to the tenancy until such time as section 213(6)(a) is complied with.
I was instrumental in bringing this case to the notice of NAEA, TDS, Trading Standards etc having been contacted by several landlords who were concerned what was happening to their money. At first the response was somewhat muted (another Agent slagging off a rival) but eventually it began to dawn on everyone that there was a major problem. The Police lost interest fairly soon after (is it not theft?) but Cambridgeshire Trading Standards, to their credit , continued to pursue the matter even though the resultant fine is somewhat pathetic.
Surely laws have been broken - mis-appropriation of client funds, failure to comply with NAEA regulations in protecting client monies, failure to register tenants deposits (this put landlords at risk as we all know what the penalties for failing to protect tenants deposits are - refund of deposit plus two months rent and no right of possession at the end of the tenancy).
In the end she will probably go bankrupt to avoid paying the fine so where has she been punished?
PS Their will be a feature on BBC Look East tonight regarding this case
Confused:
Point taken, RICS I agree are a pompus set up, but clients money is safe with their members, whatever service they use, it is up to ARLA and the NAEA to regain the respect they used to have, they have put profits before quality, allowing anyone to join for a fee, to boost membership, I remember when our company first tried to join ARLA a couple of decades ago, it was hard work with a lot of requirements needed to prove ourselves as competent agents, a bit disheartening when you regularly see third rate crooked agents displaying the ARLA/NAEA logo in their shop windows
Outraged:
Problem with the wonderful world of RICS is that no one knows about their self proclaimed status as Consumer Guardian Angels.
Visit their website - you cant even find the word 'Lettings' on there!! No reference to it whatsoever. How are Landlords to know?
They are very arrogant in their assumption that the world should know - they dont. If RICS and ARLA stopped squabbling about who was the best regulator and focussed more on the consumer, everyone would be a lot better off.
Completely outragous - The moral of this tale is never trust your property for rental or sale with any agent unless they can prove they are regulated by the toughest of all regulators namely the RICS, their criteria for membership is extremely tough.
For the record another agent not regulated by the RICS just the NAEA and ARLA, located fifteen miles away from Huntingdon allegedly did exactly the same to a far greater extent, over a year ago, got away with it totally, and is still trading
Truth is this - The Government wont regulate in part because they KNOW 100's of agents will be in trouble.
Until the TDS request a simple bank statement and reconcile this with the amount that should be held in the account its all too tempting for agents to dip into clients accounts when their backs are up against the wall.
Its incredible that the clients account balance is not reported to companies house as the deficit on many render the company insolvent.
I wonder what the auditor from 2009 has to say on the matter?
That just gives a geen light to commit fraud. What a fantastic return on investment. Invest 3k and get 90k back. Of course I am being tounge in cheek but why prison sentances are not being handed out is beyond me as it just endorses that you can and will get away with this type of fraud in the UK. Everybody knows stories of lettings agents the length and breadth of the country that have obtained monies by not looking after client accounts and then not having to pay any of it back. This is an utter sham .
I wonder how many of these so called "Lettings Agents" are BTL investors operating as a lettings agency as well?
Maybe a way forward would be for all agents not part of a scheme to wear white socks and all agents that are part of a recognised scheme can wear burlingtons. This would enable any would be landlord to be able to immediately separate the wheat from the chaff. I know this would probably be too expensive to roll out nationally maybeLondon Agent could pilot it?
Ray,
I agree that regulation on its own may not hinder the rogue Agents or, as would seem in this particular case, the plainly incompetent. However, while courts impose such derisory fines and then apparently refuse to co-operate in even making the details public - well, why wouldn't someone set up in lettings? They seem to have almost nothing to lose, not even their reputtations.
The courts should be doing their utmost to send out a very strong message, that Letting Agents who play fast and loose with other people's money should never expect to get away lightly.
Has the NAEA taken action against this agent. No mention in the article.
@AJK
Not so. Regulation will not on its own protect the public or anyone else from those who wish to defraud.
P.S. I do not wear white socks. Do you know ANYTHING.
AJK - you have no idea. It may be easy in principle - but its bloody expensive.
Even the bigger, professional agents are struggling for stock.
One thing people forget - if Landlords weren't so greedy, there would be fewer of the rogue agents.
A landlord who lost £3000 when an agent went bust called me for advice. I asked why he had used that agent who was next door to my office when they werent members of any professional organisation - "Because they were cheaper on fees" was his reply.
He saved £259 plus VAT.
That went well.
If our wonderful white sock brigade- the Estate Agents are regulated this could have been avoided-
its easier to set up a Letting or Estate Agents business than it is to sell junk at a car boot!
Outrageous verdict.
Too many people only focus on Deposit protection and forget about rents and monies taken for works.
Another plug for http://www.safeagents.co.uk
BUT - how can the court cite Data Protection regarding a trial held in public?