Commission on Lettings – where do we stand?

by Readers Question

2 years ago

Commission on Lettings – where do we stand?

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Commission on Lettings – where do we stand?

I would be most grateful if you would kindly advise me on the following matter:where

1) Our owner (a client) has recently sold the property with our tenants in situ (on an AST);
2) The tenants’ deposit is protected by the Company via TDS;
3) We have an agency agreement with the previous owner, our commission is charged monthly;
4) The new owner is requested our tenant pays them directly from completion date.

The questions are:
a) Where do we stand on collecting our commission?
b) What happens with the tenants’ deposit? and;
c) Can we deduct our fees from the tenants deposit which the new owner is liable to pay back?

I look forward to hearing from you.

Many thanks and kind regards




Mark Alexander

2 years ago

In answer to your questions:-

a) Your contract is with your client (the person who has sold). You must pursue that person for any money due to you. The Small Claims Court is probably the way to go but you must be certain that your contract is clear, fair and not misleading in respect of termination fees. If is is not you will lose.

b) I'm not absolutely sure of my ground on this one so please seek further opinion on this, I suggest you speak to TDS. However, my understanding is that you should return the deposit to the tenant.

c) Absolutely not! You are holding the tenants money, it does not belong to the landlord unless he has a valid claim on it. Your contract is with the landlord so there is no way that you can hold the tenant responsible for money owed to you by the landlord.

One further point. If you don't have a contract with the new landlord then he is perfectly entitled to ask his tenant to pay him directly.

Stephen Smith

2 years ago

If a property is sold, the new landlord assumes the rights and obligations of the tenancy.

The tenants deposit is the property of the tenant, not the landlord or the agent. If the agent holds the deposit, he holds as stakeholder for the tenant.

When the tenancy was formed there would have been a separate contract for the management of the property between the owner and the agent. On the basis of this agreement the agent collects his fees. On the sale of the property there has been no assignment of this secondary agreement. Therefore the new landlord can collect the rents directly.

The agent cannot collect from the deposit since it is the tenants money.

Not what you perhaps wanted to hear.

If the old landlord has not honoured the old LL/agent agreement there may be some redress since most agreements run with the tenancy, however if there were no specific terms it seems a letter of termination would suffice.

Graham Bowcock

2 years ago

Hi Abba

Your contract will be with the vendor (i.e. your client) so you really need to agree with him how you are to be paid. If there is a notice period to end your services then your client must give notice or pay you the commission you would have earned had the arrangement continued. It is surprising that the client has not raised it himself but perhaps he thinks your agreement can be ended without notice.

You cannot force the buyer to use your services if he does not want to. How he deals with his management and rent collection will be up to him (he may look favourably on you if the transfer is very efficient).

When we have taken over managements we have agreed the transfer of the deposit with the other agents. TDS ought to have a process for dealing with this.

I doubt you can take fees from the deposit, even if permitted it would be morally questionable. Any fees due under your management contract should be paid by the client.


All of the above is correct.

As a large well-established agent I'm very firm on chasing termination fees where a landlord wants to dump us but continue renting to the same tenant. However, where the landlord has sold the property I just let it go.

Quite simply I'm sure of my ground both legally and morally where the former is concerned, less sure on the latter.

And you most definitely can't take it from the tenant's deposit. Also, if the tenant inadvertently pays you another month's rent you can't take it from there either as its the new landlord's money.

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