AST’s  – what’s best a Contract or a Deed?

by Mark Alexander

11:22 AM, 9th August 2013
About 7 years ago

AST’s – what’s best a Contract or a Deed?

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AST’s  – what’s best a Contract or a Deed?

I am working as part of a legal group to solve an issue for landlords which I hope to be able to talk about later this month.  AST's  - what's best a Contract or a Deed?

I’m learning a lot and loving it!

The issue of contract vs Deed came up in a meeting I had yesterday. Assured Shorthold Tenancy Agreements “AST’s” can be either. I was interested to learn the difference because to the layman they look very similar.

Did you know that you have 12 years to chase a debt created as a result of a Deed but only 6 years for a contract? That could be very useful in terms of rent arrears as 12 years is a very long time and even the worst of hopeless case tenants might have had a turnaround in their finances within that period.

The only downside of an AST being a Deed instead of a contract which I could see is that each signature need to be independently witnessed by unrelated people.

The other very useful thing I learned about Deeds is that unlike contracts, which can be challenged if there is no consideration (i.e. payment), a Deed can not. Therefore, that’s why a Deed of Assurance is a Deed and not a contract as tenants don’t pay for the assurance.

Clever stuff hey?



Comments

Romain Garcin

14:46 PM, 9th August 2013
About 7 years ago

My non-qualified understanding:

If just a contract and the tenant bails before the tenancy is actually created he is in a simple breach of contract. So while he is liable for your loss, you have an obligation to mitigate that loss (i.e. to relet ASAP).
However, if agreement is executed as deed this is not the case and actually the tenancy will be created on the stated date.

But equally that means that the landlord has better be sure that he will be able to deliver the goods as it won't be a simple breach of contract if e.g. current tenant does not deliver possession in time and new tenant cannot move.

Michael Barnes

13:48 PM, 13th August 2013
About 7 years ago

Mark,

Where did you get the "two witnesses" from?

I have always executed my agreements "as a deed", following guidance in "Which? guide to renting and letting", but with only one witness.

An internet search also seems to give the answer thaty only one witness is required (but each signature must be witnessed).

Mark Alexander

15:06 PM, 13th August 2013
About 7 years ago

Reply to the comment left by "Michael Barnes " at "13/08/2013 - 13:48":

You are absolutely right Michael, it is only one witness. I knew that and that's what I've always done, usually it's a neighbour or a workman etc. I have absolutely no idea how the word "two" got to be in the article, thanks for pointing it out though. I have now removed the word "two".
.

Mark Alexander

15:09 PM, 13th August 2013
About 7 years ago

Reply to the comment left by "Romain " at "09/08/2013 - 14:46":

I would never recommend a landlord to sign the AST until move in date for these reasons. I nearly got caught out doing that once and had to effectively bribe my way out of what could have been a very awkward situation. Good observation though 🙂
.

19:39 PM, 16th May 2016
About 4 years ago

hi all can i ask a question please
if a management company has a letter from landlord to sublet he has a tenancy by deed
does the witness to the deed have to be an independent witness or can a colleague of the management company sign as witness
would it be void iun-inforcible if signed by company employee bias

your thought please


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