BUSINESS Law & Ethics Who’s my client? Ensure everyone understands the legal relationships Question:
Who is my client? And what diff erence does it make? In our offi ce, when we talk about ‘our clients’ we are usually talking about the potential buyers. But suppose we are paid by the developer who is selling the property or, if it is a private resale and we are splitting the commission of the seller’s agent? Then, is the potential buyer our client or is the seller our client? Does it matter if I refer to the buyer as the client? Do I need a contract to make the position clear?
he Oxford English defi nition of client is: “A person or organization using the services of a lawyer or other professional person or company.” If you are a professional services provider, or you are an agent, of whatever type, selling a product or services, then the person you represent may or may not be your client.
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For example, if you are a foreign property agent and you represent a developer, the developer is not your client. He is your principal and you are his agent under the law of Agency. This relationship is diff erent to that of service provider and client.
If you do not represent a developer and you are contacted by a prospective purchaser of a foreign property, who has seen it on your website or someone else’s, and he asks you to assist him in the purchase of said property, then this person may be your client. To be your client, you should
be able to represent this person honestly and without restriction, which would not be the case if you are selling properties on that same development under an agent/ principal mandate, such as a master agency or sub-agency agreement. In that case you are serving the best interests of the developer
Hold on! Who is paying you on this sale?
who will pay you on the conclusion of the sale, howsoever that is set out; usually in a formal written agreement with the developer. When you set up a sales agency and a website that advertises properties, a proposed purchaser will approach you by the internet or email or in person. He or she will ask about the property or
STEFANO LUCATELLO: Kobalt Law Tel: +44 (0)20 7739 1700
development and you will do your sales pitch of that property to him.
HOLD ON...!
Who is paying you on the sale? Is it the developer, master agent or the person who has come to you? You must formalise the relationship you will have with this person, from the very moment you talk to them. Be clear with that person whether you will or will not be able act in his best interests in that transaction. Declare your loyalty straightaway. If you cannot do so, you must say that you act for the developer and the client must seek his own representation: another agent or a lawyer. If your fees are payable by the developer or another agent, then you are not best representing that person.
Whether the prospective purchaser is your client, will also depend on whether they have signed a mandate with you to act and what that mandate says. It does matter whether you refer to the prospective buyer as a client, as this may or may not be misrepresentation.
You need a set of terms and conditions, setting out the terms upon which you are being engaged, what the person can expect of you, what you expect from him.
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