Jiashun Realtor

Case:

Key Words:

broker, offer statement, mediation deposit

Reference:

Fair Trade Commission Decision of September 8, 2010 (the 983rd Commissioners' Meeting ); Disposition Kung Ch'u Tzu No.09909

Industry:

Real Estate Agents (6812)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. The informer of this case paid mediation deposit to Jiashun Realtor (hereinafter referred to as Jiashun) to negotiate the price of a house, but Jiashun never advised the informer the distinction and choice between paying mediation deposit and signing an offer statement. When the negotiation fell through, the owner of the house confiscated the negotiation fee. Finding the loss unacceptable, the informer reported the illegal conduct to the FTC.
2. Findings of the FTC after investigation: The informer signed a "Temporary Receipt for Price Offer Deposit" with Jiashun and paid the mediation deposit. However, Jiashun never advised the informer the distinction and choice between paying the mediation deposit and signing an offer statement. Jiashun contended that, during the brokerage process, it did present to the informer a document published by the Taichung County Real Estate Agent Association (hereinafter referred to the Real Estate Agent Association) containing both the "Letter of Authorization for Transaction Negotiation" and the "Letter of House-Purchase Offer". Both were negotiation fee agreements, but the former was more complicated in content and signing it would also require stipulation of payment conditions. Therefore, most house buyers would choose to sign the "Temporary Receipt for Price Offer Deposit".
3. Grounds for Disposition:
   1. Article 24 of the Fair Trade Law "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." Since real estate transactions normally involve large amounts of capital, whereas each consumer makes only a few numbers of house purchases in his or her life; therefore, it is extremely important that related information is fully disclosed and transparent. As the rights and obligations of the potential purchaser and the real estate agent stipulated in paying mediation deposit and the signing an offer statement carry different contents and legal effects, the potential purchaser should be given the option to decide the approach to be adopted. Compared with the real estate agent, the potential purchaser is apparently less likely to have access to related information. Therefore, sometime during the brokerage process, the agent has the obligation to disclose the aforesaid information, preferably in writing, to the potential purchaser to ensure that the potential purchaser is fully aware of the distinction as well as the choice between the two options. Thus, the number of disputes can be reduced and order in real estate brokerage can be ensured.
   2. The FTC's investigation showed that the "Temporary Receipt for Price Offer Deposit" and the "Letter of Authorization for Transaction Negotiation" published by the Real Estate Agent Association were both negotiation fee agreements. The latter one was by no means harder to understand than the former one. Furthermore, the payment conditions were up to the decision of the real estate agent and the buyer, or they could be left blank or deleted. Hence, there was no reason for Jiashun to show the informer two negotiation agreements that were similar in nature. The stipulation on the service charge in the "Letter of Authorization for Transaction Negotiation" was in fact more advantageous to the potential purchaser since the buyer did not have to pay any service charge until the real estate purchase contract was signed; whereas according to the "Temporary Receipt for Price Offer Deposit", the buyer would have to pay the service charge as soon as the price negotiation was successfully concluded. Hence, if Jiashun did indeed show the informer both documents, the informer would have chosen the "Letter of Authorization for Transaction Negotiation". Jiashun was unable to present any concrete evidence that the buyer had signed the "Letter of Authorization for Transaction Negotiation"; therefore, it was unlikely that the buyer had been shown the document. The Real Estate Agent Association had printed both the "Letter of Authorization for Transaction Negotiation" and the "Letter of House-Purchase Offer" together. Since Jiashun did not show the buyer the "Letter of Authorization for Transaction Negotiation", obviously the buyer never read the "Letter of House-Purchase Offer" either. In addition, Jiashun was also unable to provide any concrete evidence of the potential purchaser signing the "Letter of House-Purchase Offer".
4. It is common for real estate agents to collect mediation deposit before negotiating on behalf of the potential buyer. However, the chief responsibility of a real estate agent is to provide needed information and bring the seller and the buyer to close the transaction. When a real estate agent collects mediation deposit from the potential buyer before completing the service, it will create constraint and inappropriate pressure, and force the potential buyer to make the transaction. If the object of transaction is defective or the related information is not fully disclosed, the interests of the buyer will be jeopardized and house-purchasing disputes will take place. Therefore, Jiashun's failure to advise the potential purchaser the aforementioned rights in relation to the transaction was passive withholding of important trading information from the potential buyer. The conduct infringed the liberty of the house buyer to determine whether he or she would make the transaction or the method of transaction. It was not only deceiving the house-buyer but also unfair competition to Jiashun's competitors who as a result lost the opportunity to broker the transaction. Therefore, Jiashun's failure to advise the potential purchaser during the brokerage process, the distinction and choice between paying mediation deposit and signing the offer statement of the Ministry of the Interior was regarded concealment of important trading information. It was deception that had the capacity to affect trading order and violated the regulation of Article 24 of the Fair Trade Law. The FTC therefore fined Jiashun 200,000 NT dollars.

Summarized by: Yang, Chung-lin; Supervised by: Hung, Shui-hsing

Appendix:
Jiashun Realtor's Uniform Invoice Number: 99648894