Size Really Does Matter: Terms of Business Agreement

Why Do I Need a Terms of Business Agreement?

Arguably the most important tool a sourcing agent can have in their document kit, when operating day to day with property investors. 

Your Terms of Business Agreement is there to make it at rock solid and clear as possible to any investor you work with what your terms are and the requirement of taking your hard-earned fee.

In law there are a lot of clauses that legally should be in agreements, and yes it's true that if you write an agreement and someone reads it and signs it technically it's an agreement but will it hold water in a complaint?

No.

Because there are certain things that the redress schemes certainly are looking for if a complaint is made. in any way, shape or form about taking deposits, holding deposits if they're refundable, how much is taken, etc.

What About An NDA?

Drop it in the recycling bin. Yes, honestly. 

A Non-Disclosure Agreement (NDA) will do absolutely diddly squat for your sourcing business when it comes to either an investor making a complaint, or you wanting to get paid. 

What we are finding when working closely with both property redress schemes through our National Association, NAPSA - is that TPO and The PRS are awarding to investors in a lot of cases due to the sourcing agent's contracts not being solid or clear enough. 

From what we've seen so far, the awards are sitting around a standard sourcing fee, between £2k - £5k, so this really is serious business if an investor makes a complaint about you. 

I Have a One-Page Terms of Business Agreement

Recycle it. Get yourself a document with significantly more substance. 

Yes, it's important to have this agreement in place but it also needs to be fit for purpose. We've already established an NDA just won't cover it, so what do you need to have in your Terms of Business?

• Clear details around your fee - is it refundable, non-refundable, deductible?
• How much is your fee?
• Confidentiality details
• Complaints information
• Money laundering policy
• Due diligence details

This is just to start. Take our own Terms of Business contract that we've developed over the best part of a decade with Forbes Commercial Contracts - it's 17 pages long! 

We use this for our own sourcing business and have the document checked (as part of our training course) on a regular basis to make sure it's still relevant and holds for what's needed day to day. 

This document alone has cost us in the region of £5,000 to get up and get right. It's expensive and not something every sourcing agent can afford when starting out. 

One thing that's incredibly important is your investor is clear on your fees and terms. Don't drop the information in teeny tiny writing that they could gloss over and miss.

You don't want them kicking off at you further down the line when you surprise them with your invoice. Chances are, you'll get a complaint letter from them and perhaps one from the redress schemes too. 

Fit For Purpose Documents & Contracts

We continue to check all of our legally required documents + bonus ones on a regular basis, and update our course students with new templates or guidance. 

It's an ongoing process and one that not all sourcing agents have the time to continuously check and research - proliferation finance anyone?

On our Legally Required Document pack, you'll get access to the documents we use in our sourcing business, plus video training for each to show you why, when and how you need to use each. 

For just £795 to get 12+ documents, plus 12 months' worth of updates and new templates that come through - it could very well save you in the long-run from redress scheme awards to investors, and make sure you get paid!