Michael McGrath (Cork South Central, Fianna Fail)
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513. To ask the Minister for Justice and Equality the legislative steps taken to date against so-called gazumping by preventing the vendor of a residential property from accepting further offers for the purchase of that property having accepted a deposit from an initial purchaser or to give such an initial purchaser an entitlement to compensation from a vendor who accepts a further offer despite having accepted a deposit from that initial purchaser; and if she will make a statement on the matter. [12025/15]

Frances Fitzgerald (Dublin Mid West, Fine Gael)
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The position is that instances of gazumping normally arise where a non-enforceable agreement for the sale of property at a particular price is reached between a vendor and intending purchaser but subsequently the vendor refuses to complete a formal contract and sells the property to another purchaser for a higher price. The non-enforceable relationship between the original parties is preserved by use of the term "subject to contract".

The problems associated with gazumping were examined in detail by the Law Reform Commission in its 1999 "Report on Gazumping" (LRC 59-1999). The Commission noted that delays arising between the conclusion of negotiations and completion of the formal contract were usually for the benefit of the intending purchaser, e.g. to ensure the availability of funding for that property, or to ascertain if there were any legal difficulties in relation to the title. The Commission concluded that the only practicable reforms were to improve the information available to intending purchasers and to regulate the terms according to which booking deposits are paid and accepted. It did not recommend any specific legislative reforms to the legal framework within which gazumping occurs.

The issue was subsequently considered by the Auctioneering/Estate Agency Review Group in its 2005 Report to the Minister for Justice, Equality and Law Reform. The Review Group noted that intending vendors retain the right to raise or lower their asking price or to withdraw their property from sale, and purchasers can also reduce their offers or withdraw from an intended purchase at any time before the contracts are signed by both parties. The Group endorsed the conclusion of the Law Reform Commission that "the only practicable reforms are to take steps to inform buyers and, in that way, to protect them".

The Property Services Regulatory Authority, which has been established under the Property Services (Regulation) Act 2011, has published a detailed “Guide for Users of Property Services Providers in Ireland" which explains the legal position in relation to gazumping and related matters such as payment of deposits and signing of contracts. The Guide is available on the Authority's web site (www.psr.ie).