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  • Landlords in Distress

    Use of NDAs to silence property victims

    I am increasingly hearing privately from people who are victims of property scams, mentoring, training, schemes (and other property-related wealth creation activities) who are too scared to speak out against wrong doing because they have been threatened with legal action for breaking an NDA - non-disclosure agreement - that they signed either at the beginning of the commercial relationship or later down the line.

    I thought I would shed some light on this as NDA's are often used by people and companies/organisations to "scare" victims into remaining silent and therefore the "activity" continues and there are no warnings issued to regulators or on social media to alert the community.

    It is worth noting that being asked to sign an NDA at the start of a commercial transaction could be seen to be a bit of a red flag straight off the bat.  So make sure you fully understand the need for the NDA (which can be legitimate) and have any legal agreements and small print checked over by a independent solicitor before you sign and hand over any money.

    For what it is worth, in 10 years of running Property Tribes, we have never heard of a single NDA in the property sector being enforced. 

    To enforce one is challenging, especially when the court may find that it is in the "public interest" that the information was put into the public domain.

    Secondly, there is the recent case brought to light by the Guardian about the use of NDAs in the gambling industry which is relevant to the property sector and is starting the shape the Government's view on this issue, especially in light of other high-profile cases that involved the use of NDAs or “gagging orders”, as they are otherwise known.

    The Gambling Commission issued a warning notice to gambling businesses on 1st February 2019 letting them know that it believes some operators have been using non-disclosure agreements (NDAs) when settling disputes with customers and that “some of these agreements may have had the effect of preventing those consumers from reporting regulatory concerns to us.”

    As the notice points out, the Commission recognises “in certain commercial contexts, use of NDAs is commonplace and such agreements, when used properly, can benefit both parties.” 

    However, the regulator is “keen to ensure” that, for instance, NDAs do not “result in consumers feeling they are unable to notify the Commission or other regulators or law enforcement agencies of conduct that might otherwise be reported".

    Thursday’s note from the regulator focuses primarily on the possible use of NDAs to prevent possible criminal behaviour, or failures in procedures to prevent gambling-related harm, being reported to the Commission.

    Full/source article 

    This phrase is key here:

    "the regulator is “keen to ensure” that, for instance, NDAs do not “result in consumers feeling they are unable to notify the Commission or other regulators or law enforcement agencies of conduct that might otherwise be reported.”

    The Solicitors Regulation Authority (SRA), the legal watchdog, became so concerned over the proliferation of NDAs that it issued a similar warning notice last year. 

    “We recognise that NDAs can legitimately be used to protect commercial interests and confidentiality and in some circumstances, to protect reputation,” said the SRA. It expressed its concern that some NDAs were making people “feel unable” to report concerns to among others, “law enforcement agencies”.

    The biggest regulator in the property sector is the Financial Conduct Authority who deal with such issues as residential lending, crowdfunding, collective investment schemes and can also shut down un-regulated schemes.  You can use the FCA's "whistle blower" reporting service >>> here.

    Whichever niche investment sector you are affected by, the threat of NDA enforcement should not stop you going to the relevant authority to raise your concerns.  For the wider property sector, these can include Trading Standards, the police, and Action Fraud

    If you are threatened by the enforcement of an NDA, you should not be scared to contact the relevant regulator or authority and also to speak out if you believe it is in the public interest.

    Provided that you keep your information entirely factual, and you are able to evidence it, it is highly unlikely that the threat will ever come to anything and you can do your bit to keep the property sector safer.

    Clifford Tibber, partner at Anthony Gold Solicitors* and an expert in dispute resolution commented:

    "There is a place for NDA’s but not to hide illegal activity or prevent whistle-blowing".

    Obviously, I am not a lawyer, (although I did have this article checked over by one for accuracy) and I am just sharing my observations, so, if you are affected in any way by this issue, then you would be advised to seek independent legal advice.

    Reporting concerns to the appropriate regulatory body and/or sharing your experiences on social media means you do not have to suffer in silence or watch others being taken in by the same individual/company/scheme.

    Transparency notice: * denotes commercial partner of Property Tribes.

    SEE ALSO  -          Crowd funding - too easy to raise money?

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    Whenever you hear of a dodgy JV deal or unscrupulous mentor there's always an NDA involved. So many NDA's are unenforceable but the threat of it, coupled with the person knowing they have been 'done over' means they wont speak out & probably end up losing all their money.

    If you are offered any deal where an NDA is involved  without good reason, there is a strong possibility that you are going to get shafted.


    Phil Stewardson.

    Stewardson Properties.

    Stewardson Developments Ltd.

    Burson Land Ltd. & Jennings & Gilchreaste Ltd.


    Follow me on twitter - @philstewardson