The Irish Home Builders' Association's Home Purchasers' Pledge, introduced earlier this year, is a welcome attempt to deal, in the new home sector, with the problem of gazumping - that is, a vendor accepting a higher offer having already agreed a sale subject to contract. The IHBA Pledge has reassured the public on the building industry's attitude to the issue. In looking at the whole question of gazumping in Ireland, we must bear in mind that the real incidence of gazumping in this country is actually very low.

In England and Wales, it takes, on average, 12 weeks from the time a sale is agreed until contracts are signed and exchanged. In many instances, marketing of the property continues during this period. Everybody recognises that any delay in executing contracts will foster gazumping and therefore it is no surprise to know that gazumping is widespread in England and Wales, even in normal market conditions.

For the same reason, gazundering, that is, the buyer failing to proceed with an agreed deal or attempting to negotiate a last-minute reduction in price before executing contracts, is also a feature of the English and Welsh systems of house sales.

It is little wonder that the British Government is seeking ways to streamline the house buying process in England and Wales.

The IHBA code commits a builder to ensuring that his solicitor issues a draft contract within four weeks of the acceptance of a booking deposit. In practice, this provision is already causing headaches for builders and solicitors because the time-scale cannot always be adhered to, despite the best of intentions.

The advanced marketing of new properties subject to planning permission is likely to become a thing of the past and astute builders will wait until planning and other matters crystallise before marketing new schemes. With the threat of up to 20 per cent of sites in new developments having to be sold at knock-down values to local authorities, the temptation for builders with existing "clean" planning permissions to sit and wait the inevitable upturn in the value of their product before building is a new delaying factor.

Gazumping in Ireland does occur, but on a scale that does not warrant the headlines devoted to the issue in the recent past. Yes, some builders reneged on transactions even though contract documents, signed by the buyers, had been returned weeks, if not months, beforehand. The public should know, however, that the number of builders who gazumped was tiny and that the vast majority of builders continued to act in an honourable fashion.

The IHBA code only affects new homes and, even if it is totally successful, gazumping will still occur in the second-hand sector. For many vendors, the chance of an extra £2,000 to £3,000 or more can be too tempting for them to honour their verbal agreement.

Much comment has been made on booking deposits; some of it is not in the long-term interest of buyers.

A Private Member's Bill, introduced into the Oireachtas by Fine Gael, proposed that the taking of a booking deposit should create a legal obligation on the vendor to sell at the agreed price. The voluntary IHBA code goes some way down the same road.

However, were the legal implications of taking a booking deposit to change, agents would be instructed by clients and solicitors to stop taking them. Had the bill been enacted, deposits would most likely have disappeared rather than becoming the bedrock of a contractual obligation on the vendor's part, as the Bill's authors presumably hoped.

There have been calls on auctioneers and solicitors to adopt self-regulated codes in the area of deposits. The IAVI has had such a code in place since 1996. It obliges IAVI members, on taking an initial deposit, to:

Change any sign on the property to read "Sale Agreed"

Cease marketing/advertising/ showing the property

Facilitate surveys only on behalf of the depositor

Thus, buyers purchasing through an IAVI agency receive quite a lot when paying over a deposit without being obligated to proceed with the purchase, and in the knowledge that their deposit is refundable on demand up to the time they sign the contract. What buyers do not receive is a one-way option to proceed with the transaction. At present, the vendor is only obligated to proceed when he or she signs and exchanges formal contracts.

Agents cannot act as if the Law of Contract and the Law of Agency were different than they are. Agents have legal obligations to their clients and they cannot be forced to act against their client's legitimate instructions. If a vendor insists that marketing continues after a sale is agreed, but before contracts are executed, the agent has no choice but to comply. Whether or not this happens, if a higher offer emerges before contracts are signed, the agent is legally obliged to advise the vendor and to act on his or her instructions.

No one has yet given a bona fide reason for the elimination of booking deposits that withstands scrutiny. If booking deposits go, auctioneers will be instructed to actively market properties right up to the time formal contracts are executed - as they do in England and Wales. It is very much in the interest of buyers that booking deposits continue to be taken.

It is unwise to legislate solely for strong market conditions. Legislation must apply in all markets and must be fair to both purchasers and vendors. The actual marketing of new and second-hand homes in Ireland has operated successfully for decades. A small number of headline cases brought on by the most extraordinary property boom we have ever experienced does not mean that our system is fundamentally flawed. Our system is generally excellent and the public has been well served by it.

The Scottish selling method has been put forward as a possible solution to gazumping, and certainly gazumping is extremely rare in Scotland. But there is no such thing as a free lunch.

Scottish law differs from Irish law in that Scottish law recognises a verbal contract without the need for it to be evidenced in writing. Irish law does not. The Scottish system involves verbal tenders for all properties. Buyers do not know at what level to pitch their bids and may pay a great deal above the second highest bidder, if there is one - a buyer never knows if he had competition at all. In addition, tenders in Scotland are unconditional, requiring both pre-survey and title investigations for each property one intends bidding on. Those who champion this system complain that unsuccessful bidders at Irish auctions have to undertake the same pre-survey and legal investigations. Yet they propose the adoption of a system that would extend these obligatory costs from just auctions to all homes being sold in Ireland. Is the average buyer better off under the Irish or Scottish system?

On the vexed question of surveys, the proposed changes in England and Wales involve the necessity for vendors to provide a survey report of their property. The nature of this report has not been decided. The IAVI would have major difficulties with this proposal. The surveyor's liability will extend to any unnamed buyer and the cost of professional indemnity insurance will increase dramatically. In one famous English case, a surveyor lost £30,000 because he failed to spot hidden defects - his fee for the survey was all of 30.

In all probability, the survey reports produced for vendors in these circumstances will be either too conservative or so innocuous as to be virtually useless.

When the report is handed to prospective buyers, and more importantly their solicitors, we believe the advice will be to have a personal survey undertaken anyway. Neither money nor time will be saved - surveys are generally conducted within 48 hours and often within 24 hours.

The Law Reform Commission is examining the need for legislative changes to curb gazumping. The Irish Auctioneers & Valuers Institute (IAVI), which represents most of Ireland's auctioneers, made a submission to the Commission and argued that limited legislative change to the Law of Contract is required.

Legislation is unlikely to totally eliminate gazumping. Any legislation that curtails the actions of principals or their agents before the issuing of a contract in a private treaty sale will be circumvented if possible. The legal duties of an agent to the vendor oblige the agent to find a legitimate way around the legislation if such a way exists. However, it is possible to legislate to greatly restrict gazumping. At present, solicitors issue contract documentation couched in language which denies that the documentation forms the basis of a contract or that a verbal agreement to sell the property actually exists.

Do not blame solicitors for this. If they did not protect the vendor in this way, the vendor would be unable to accept a higher subsequent bid. The same courts that sympathise with gazumped prospective buyers would condemn solicitors who failed to protect their client's interests in accordance with normal practice. Catch 22 for the professionals yet again.

Let us legislate so that issuing a draft contract in a private treaty sale becomes a step in the legal chain and grants a short-term option to the buyer to proceed with the purchase on the agreed terms.

IF the buyer executes the contract without unilateral changes and returns it to the vendor's solicitor with the deposit within a stipulated period, the contract should be enforceable - with or without the vendor's signature. Thus, the buyer would have only himself to blame if he fails to act.

This will not totally eliminate gazumping. It is impossible to do so as long as we rely for enforcement on written evidence of a contract. But at least we would prevent the most painful form of gazumping - involving purchasers who have signed contracts within the stipulated time-scale but who can still be gazumped under existing legislation.

Government resolve on this issue will only be proven if it moves speedily to enact legislation should the Law Reform Commission deem it necessary.