Home sales by competition risk breaking the law, says Law Society

Home sellers are being warned by the Law Society to tread carefully in relation to homes being sold via competitions, or risk breaking the law.

As homeowners find it harder to sell in the current economic downturn, they are looking to pursue alternative methods, such as sales by estate agents and competitions. An increasing number are attempting to organise competitions whereby entrants pay for the chance to win the property.

However, strict laws on running lotteries could mean sellers are breaking the law without realising it. Lotteries must be licensed by the Gambling Commission and they must not be for profit or commercial gain.

Law Society President, Paul Marsh, says, “While there are just a small number of sellers attempting this type of sale, it is possible that it will become more common as the market continues to dry up.

“Anyone who is considering selling their home this way should seek legal advice from a solicitor before proceeding. The consequences of not doing so could result in them breaking the law. Ignorance is no defence in law.

While some individuals may seek to introduce a skills or knowledge element into the competition to avoid the need to obtain a licence, if the skills element is at the legally required standard, the number of people eligible to enter is likely to be below the number required to make the competition viable.”

Calls to the Law Society’s Practice Advice Service from solicitors querying house competition sales have increased in the last month, prompting the Society to issue a Practice Note to its members advising on how to deal with competition house sales, particularly how to identify fraud, money laundering as well as any breaches of gambling laws.

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