Hi Zhang Estate Management Co., Ltd. violates the Fair Trade Law by its improper activities during the trading process of house brokerage

Case:

Hi Zhang Estate Management Co., Ltd. violates the Fair Trade Law by its improper activities during the trading process of house brokerage

Key Words:

house brokerage, negotiation fee, offer statement of the Ministry of the Interior’s version

Reference:

Fair Trade Commission Decision of June 10, 2004 (the 657th Commissioners’ Meeting); Disposition Kung Ch’u Tzu No. 093059

Industry:

Real Estate Agency (6612)

Relevant Laws:

Article 24 of the Fair Trade Law

1. The complainant, Mr. Chen, commissioned Hi Zhang Estate Management Co., Ltd. (hereinafter called “Hi Zhang Estate”) as his broker to buy a house. The complainant paid a negotiation fee as requested by Hi Zhang Estate to show his sincerity to buy the house. However, the complainant discovered afterwards that when Hi Zhang Estate raised the request for the negotiation fee, it neither informed the complainant of the fact that the offer statement of the Ministry of the Interior’s version is another option available for him to choose, nor explained the distinction and the substitution relation between both options to the complainant, which is possibly in violation of Article 24 of the Fair Trade Law (FTL).
2. Findings of the Fair Trade Commission (FTC) after investigation:
   It was the first time Hi Zhang Estate engaged in house brokerage. It did not fully realize the detailed provisions prescribed by the FTC providing that when a real estate brokerage business requests a house buyer for the negotiation fee, it must inform the buyer of the option of adopting the offer statement of the Ministry of the Interior’s version. There was also no factual evidence that Hi Zhang Estate had informed the house buyer of the option to adopt the offer statement of the Ministry of the Interior’s version.
3. Grounds for disposition
   1. In accordance with Article 24 of the FTL, “in addition to what is provided for in this Law, no enterprise shall otherwise have any deceptive or obviously unfair conduct that is able to affect trading order.” The term “deceptive” shall refer to a misleading way adopted to deceive or conceal material facts to induce trading counterpart to undergo the transaction with the wrongdoer, or to impede competitors to lose trading opportunities. Due to the trading characteristic that house brokerage businesses charge a negotiation fee to negotiate prices for buyers, and the fact that house brokerage businesses control the trading information of both the seller and the buyer in the trading process, if the brokerage business conceal the trading information, it would put both the buyer and the seller into a trading position apparently unbalanced with that of the brokerage business, and might violate the rights and interests of the consumer public. Therefore, when a brokerage business employs such characteristic of unsymmetrical trading information and conceals the distinction and the substitution relation between the negotiation fee and the offer statement of the Ministry of the Interior’s version, the brokerage business may violate Article 24 of the FTL. That a brokerage business requests the negotiation fee from a house buyer without informing the buyer of either the option to adopt the offer statement of the Ministry of the Interior’s version or the distinction and substitution relation between both options is one of the typical examples. Thus, the house brokerage business should separately inform the house buyer in writing of his/her right to choose the “offer statement” of the Ministry of the Interior’s version. The content of such writing shall summarize the difference and the substitution relation between the options of the “offer statement” and the “negotiation fee”; it shall also be confirmed by the house buyer with his/her signature on such writing to clarify the brokerage business' duty of declaration.
   2. According to Hi Zhang Estate’s confession at the FTC, that was the first time it engaged in house brokerage, and it did not realize the obligation of informing the buyer of the option to adopt the offer statement of the Ministry of the Interior' s version when raising the request for the negotiation fee; it also failed to provide evidence of informing the complainant of the option to adopt the offer statement of the Ministry of the Interior’s version. Therefore, it is not disputed that Hi Zhang Estate failed to inform the house buyer of the distinction and the substitution relation between the negotiation fee and the “offer statement” of the Ministry of the Interior’s version when requesting the negotiation fee during the house brokerage transaction, which was deceptive conduct able to affect the order of trade, and constituted a violation of Article 24 of the FTL. After deliberating the facts that it was the first time Hi Zhang Estate ever engaged in a house brokerage transaction, and already had actively pushed through a settlement with both parties to the transaction after the dispute occurred, the FTC hereby ordered Hi Zhang Estate to cease such deceptive conduct described above that was able to affect trading order pursuant to the forepart of Article 41 of the FTL

Appendix:
Hi Zhang Estate Management Co., Ltd.’s Uniform Invoice Number: 80182241

Summarized by Wang, Kuo-Liang; Supervised by Chen, Yun-Shan