THE introduction of pre-sale agreements – with financial penalties for breaches – should be considered to stop gazumping and gezundering in the residential property market, a Scrutiny sub-panel has said.
For the past two years, the sub-panel has been investigating gazumping – where a homeowner accepts a higher offer from a third party despite having already accepted a bid from someone else – and ‘gezundering’, where a buyer lowers their offer at the last minute.
In a new report, the sub-panel has called on Chief Minister Ian Gorst to start a consultation into whether pre-sale agreements should now become part of the standard process for residential property deals and whether financial penalties should apply if they are breached.
The Residential Property Transactions Review Panel has called for the findings of the consultation to be presented to the States before the end of May next year.
The report says that unlike in many other jurisdictions, in most Jersey property deals there is no form of preliminary contract between buyers and sellers before deals are finalised in the Royal Court.
‘Such a degree of uncertainty gives rise to the possibility of last-minute problems, a situation that is both highly unsatisfactory and avoidable,’ it says.
Sub-panel chairman Deputy David Johnson said that the current laws governing property transactions in Jersey date back to the 19th Century and improvements could be made.
‘The overall objective of this review has been to assess whether the present system adequately serves the needs of the public in the present age,’ he said.
‘While the panel concludes that, with the co-operation of various stakeholders, changes can be made to improve the current system, this does not remove the clearly identified need to undertake a comprehensive review of the present law.’
Gill Hunt, of Hunt Estates, who is the Channel Islands’ representative for the National Association of Estate Agents, said that in the UK there are two stages to property transactions, unlike in Jersey.
‘In the UK you have the exchange and completion. Everybody exchanges and a deposit is paid and then the deal goes through completion at a later date,’ she said.
‘In Jersey you exchange and complete at the same. But it is possible to sign a preliminary agreement in Jersey if you want to.
‘So, if you speak to your lawyer, you can put something in place ahead of completion.
‘If the Scrutiny panel thinks that the laws should be tightened up and more people should be made aware that they can do this, then that could help people.’
She added, however, that the vast majority of property buyers and sellers in Jersey do not resort to gazumping or gazundering.
The report also recommends that another day of the week, apart from Friday, is set aside for property deals to be passed in the Royal Court to speed up transactions.
It also suggests a localised conveyancing qualification is established, more conveyancers are trained and that a land registry be set up in the Island.