A man in Xiamen, who entrusted an agent to bid on a court-auctioned property, later discovered he had overpaid by a significant margin after the agent exploited an information gap. The Xiamen Intermediate People's Court recently ruled on this contract dispute, ordering the agent to return the difference. The case highlights the risks of blind trust in property intermediaries.

In December 2023, the buyer, identified as Li, signed a notarized power of attorney with Wang, who claimed to be a property agent, authorizing Wang to bid on a foreclosed house on his behalf. On the same day, Wang also signed a separate "Property Sale Agreement" with Li, acting as the agent for the property owner, Chen. The agreement stipulated a sale price of 2.48 million yuan. However, Wang had no prior relationship with Chen and possessed no authorization to act for him.

In January 2024, Wang successfully bid for the property in Li's name at a winning price of just 1.98 million yuan. Following Wang's instructions, Li paid a total of 2.48 million yuan and obtained ownership of the house. Months later, upon discovering that the actual auction price was 1.98 million yuan, Li realized he had been overcharged by 500,000 yuan. He subsequently filed a lawsuit to recover the excess purchase price and interest.

After deliberation, the court found that Wang, acting on the notarized authorization from Li, had bid on the property in Li's name, making Li the actual purchaser in the court auction. The court determined that the transfer of property ownership was not based on the "Property Sale Agreement," but rather on the legal outcome of the court auction, where ownership is transferred with the assistance of relevant authorities following the issuance of court documents to the winning bidder. The terms of the "Property Sale Agreement" involving the seller, title transfer, and delivery were impractical and could not be fulfilled, and in fact, were never executed. The court therefore rejected Wang's defense that the deal was governed by the sale agreement, clarifying that the actual relationship between the parties was a contractual agency for purchasing the property.

The court's ruling emphasized that the "Power of Attorney" was the document that defined the executed relationship. It concluded that Wang, as the fiduciary, had violated his duty by requiring Li to sign the sale agreement and by deliberately concealing the true auction price to profit from the information gap. This conduct constituted a breach of fiduciary duty, leading to substantial losses for the client, and Wang was ordered to return the 2.48 million yuan paid by Li, minus the auction price of 1.98 million yuan and any other legitimate expenses incurred during the process.

In delivering its verdict, the court also offered guidance to the public. Prospective buyers of court-auctioned properties are advised to do thorough research by checking online resources or consulting the court to understand the property's condition, existing liens, and the auction process. If using an agent, it is critical to sign a formal contract that clearly defines the scope of the agency, compensation, penalties, and other terms. All documents provided by the agent should be carefully reviewed before signing. Agents are reminded to act in good faith and fulfill their duties without harming clients' interests. An agent's attempt to pose as a seller and secure an excessive price difference through a separate sale agreement will not be supported by the courts.

Legal references cited in the case include Article 164 of the Civil Code, which states that an agent who fails to perform or inadequately performs their duties, causing harm to the principal, must bear civil liability. If an agent and a third party maliciously collude to harm the principal's interests, they may be held jointly liable. Also cited was Article 962, which obligates intermediaries to truthfully report matters related to the contract, and holds that intermediaries who deliberately conceal key facts or provide false information, harming a client's interests, are not entitled to remuneration and must compensate for resulting losses.