Buying a rented house and not retaining the agent

by Readers Question

8:10 AM, 21st March 2013
About 6 years ago

Buying a rented house and not retaining the agent

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Buying a rented house and not retaining the agent

Buying a rented house and not retaining the agentI am buying a house from my brother that he is renting via an agent. I do not want to use the agent and would like to manage it myself however the existing tenants want to stay whom were found by the agent.

The agent has said to me that this is only possible if either myself or my brother pay him an introductory fee of £350+VAT as he is forgoing his right to rent.

Is this true if the house is being sold from one person to another and there will legally be a new owner of the property?

The agent is being awkward and putting pressure to pay it up front or he will take it from the rent and I am not sure where I stand legally.

Thanks

Rak Kanabar



Comments

Mark Alexander

8:18 AM, 21st March 2013
About 6 years ago

Hello Rak, you are only liable to pay the letting agent a fee when you buy the property if you are a party to the agreement with the letting agent and if the letting agents agreement is clear that a fee is payable. From what you have said, I doubt that is the case. HOWEVER, it's quite likely that your brother has an agreement with the letting agent and it's also quite likely that the agreement will require him to pay a fee or at the very least give notice to terminate the contract. Therefore, this is your brothers problem to sort out, not yours. So far as the law is concerned, forget the fact that you are buying from your brother. You could just as easily be buying from me. If I have an agreement to settle with an agent to terminate my contract that's my responsibility. Once you own the property the tenant will be paying you so the agent will not be in a position to deduct any rent from you. When you complete the purchase, I suggest you ask your solicitor to make sure that everything is in order with the tenancy agreement, inventory, deposit protection, Gas Safety Certificate etc. before you exchange contracts and complete the purchase.

Antony Richards

16:14 PM, 21st March 2013
About 6 years ago

Yet another agent giving us a bad name. I know none of us is perfect but why be so greedy? Makes my blood boil

17:52 PM, 21st March 2013
About 6 years ago

Can't see your agent has any right to claim - the contract he took out was with your brother, and that contract terminates when your brother sells the house?..The Agent might have a claim if they have something in their agreement that's a condition of sale like this, but I think they'd struggle to show loss in a court

Mark Alexander

18:01 PM, 21st March 2013
About 6 years ago

@David McLennan - we seem to be saying the same thing, i.e. agent has no contract with Rak but he may well be able to charge his brother for terminating the contract.

18:02 PM, 21st March 2013
About 6 years ago

Rak

Look at the Contract! Unless it is more than extraordinary, ask your solicitor to administer a flea in the agent's ear.

Any termination charge must be spelt out clearly but that is a battle for your brother and we must hope his solicitor can also give the agent the brush off.

Mark Alexander

18:10 PM, 21st March 2013
About 6 years ago

I may be missing something here but the comments from Lindsay and Anthony seem to suggest that the agent has done something wrong here. Forgive me if this is a stupid question but what has the agent done wrong? Is he not just trying to enforce his early termination clause? I admit it's a bit cheeky to suggest the buyer should pay it but if he had a contract with Rak's brother, why should Rak's brother not pay the termination fee?

9:32 AM, 22nd March 2013
About 6 years ago

Would it be possible to talk to the tenants and ask them to give the statutory notice to quit to the Agents. You could then be in a position to rent it to them yourself as a private landlord at the end of the notice period. Obviously, this would require a lot of trust on the tenants' part.

I'm not sure if this is legal so you would need to find out first.

Industry Observer

10:38 AM, 22nd March 2013
About 6 years ago

Mo

You are right it is illegal in the sense it will not circumvent a clause in a landlord contract that fees have to be paid on an ongoing basis as long as any party introduced to the property by the agent remains in the property.

Obviously they could stay there 20 years so the ex landlord does not want that, so normally there is a buy-out fee and £345 sounds reasonable to me - it usually represents 6 months fees.

What is not clear here and needs to be known is whether originally this was a tenant find only as although it sounds like it was in full management you also say the tenants were "found" by the agent.

If that is the case and a one off fee was paid for that then I fail to see how the agent has a claim against anyone and any attempt to enforce one would surely fail as per Foxtons? Just threaten to go to the OFT.

18:52 PM, 22nd March 2013
About 6 years ago

Thanks for the replies.

To clarify it has been fully managed by the existing agent who also found the tenants .

Industry Observer

10:02 AM, 23rd March 2013
About 6 years ago

In that case Rak there is no contractual relationship between you and the agent and thus there can be no liability.


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