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Jon Payne Solicitor, Barrister |
Annie Hutchinson Executive |
House Competitions / Raffles /Draws
There is a growing trend to try and sell houses by way of a competition rather than by using a traditional estate agent and also may be a way of avoiding the payment of stamp duty.
Some of these schemes are very innovative, but can very easily fall foul of the law if they are a form of gambling. Many of the schemes that we have seen have significant flaws which could render the organisers liable to prosecution and the possibility that all entrant's fees have to be repaid in full. Others have clearly had the benefit of good legal advice from a solicitor or other lawyer who is an expert in this area of law.
One way to escape the need for a licence and to operate legally is to design a competition that involves an element of chance but also first requires a sufficient level of skill, judgment or knowledge to deter a significant proportion of potential entrants from participating or eliminate a significant proportion of actual entrants from receiving a prize. One fundamental problem is that some competitions are organised as a lottery, raffle or straightforward draw. Lotteries are the preserve of charities and cannot therefore be used if the main purpose is for private gain.
It is also important to ensure that the Terms and Conditions of the competition provide adequate protection, covering such circumstances as what should happen if there are insufficient entries or the competition is stopped for some reason.
Planning a competition requires considerable forethought and if you are intending to do so, you need to be prepared for all eventualities. Not all competitions end in the disposal of the property and a cash prize is normally offered if there are insufficient entries. In particular, you need to ensure that you have a reliable method of accepting payment as not all on-line payment merchants will wish to do business with you and several competitions have been stopped mid-way because banking facilities have been withdrawn.
We advise anyone contemplating a house sale competition to seek expert legal assistance first. Our solicitors have expertise in his area, having been involved in a number of competitions, and can advise on how to undertake the competition within the law. We are able to draft terms and conditions, review any publicity material and supervise the draw at the end, if one is needed. Our team are able to undertake the conveyancing of the property to the winner.
Our costs for assisting in a competition vary according to the extent of the work that is needed, but typically run from about £500 plus VAT for running a 'health check' on your proposals.
Penalties for running a lottery or other gambling activity without a licence can be up to 51 weeks in prison and/or a fine of £5,000 or more in the Crown Court.
email :jpayne @hlf-law.co.uk
Tel : 0800 043 0538
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