Prescribed Information and Ltd Companies?

by Readers Question

11:04 AM, 13th February 2017
About 2 years ago

Prescribed Information and Ltd Companies?

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Prescribed Information and Ltd Companies?

Bali v Manaquel Company Limited (County Court at Central London (HHJ Hand QC), 15th April 2016.

This to give people a heads up as many will get caught out when they let through ltd companies trying to escape s24.

A tenant was successful against the landlord’s claim for possession, because the Prescribed Information was not executed in accordance with section 44 of the Companies Act 2006. Section 44 written as below:

“A document is validly executed by a company if it is signed on behalf of the company

  • by two authorised signatories, or
  • by a director of the company in the presence of a witness who attests the signature”

Company landlords must now ensure the prescribed information is executed correctly although the Deregulation Act 2015 permits an agent to sign on its behalf.

Joel



Comments

Gary Nock

12:11 PM, 13th February 2017
About 2 years ago

Very sneaky. So a lot of Ltd Co's who manage their own properties need to get auditing I think. And if the Prescribed Information has not been signed by two signatories or by a director with a witness it probably means it hasn't been signed and served properly. Just when we thought we had clarified things after Superstrike this comes up.

Gary Nock

12:13 PM, 13th February 2017
About 2 years ago

And what happens if the agent is also a Ltd Co? Does this mean that agents who are Ltd have to follow the same rules?

Ian Narbeth

12:59 PM, 14th February 2017
About 2 years ago

This does not sound right. I fear the learned QC has erred. Section 43 of the CA 2006 says that a contract may be made on behalf of a company, by a person acting under its authority, express or implied. This would include agents. The Prescribed Information form is not a deed and it is not a contract so why the judge ruled that the formalities of s44 (which apply to documents that need to be "executed") is a mystery.

If the judge is right then God help corporate landlords. Millions of Prescribed Information Forms will have been signed by agents or by a single director/company employee. If these fail per Bali v Manaquel Company Limited then the effect is that the relevant notice has not been given and it would follow that tenants can demand the one to three times penalty for not serving the notice.

However, I think the judge is completely wrong. Section 213(5) of the Housing Act 2004 says:

"A landlord who has received such a tenancy deposit must give the tenant and any relevant person such information relating to—

(a)the authorised scheme applying to the deposit,

(b)compliance by the landlord with the initial requirements of the scheme in relation to the deposit, and

(c)the operation of provisions of this Chapter in relation to the deposit,

as may be prescribed."

The requirement is to "give...information...as may be prescribed".

Section 2 of The Housing (Tenancy Deposits) (Prescribed Information) Order 2007 sets out what is prescribed.

I can find no requirement for the Prescribed Information form to be executed by the landlord.

Romain Garcin

14:32 PM, 14th February 2017
About 2 years ago

Reply to the comment left by "Ian Narbeth" at "14/02/2017 - 12:59":

Hi Ian,

s.2(1)(g)(vii) of the order states that the prescribed information include "confirmation (in the form of a certificate signed by the landlord)".

In this case it was signed by someone with the mention 'PP'.

Note that the Deregulation Act has since amended the order to explicitly allow the landlord or the person who has complied with the requirements to sign. So the issue should probably no longer exist as long as the right person signs.

Colin McNulty

8:43 AM, 20th February 2017
About 2 years ago

I rent out my own and leased properties, either personally or in my LtdCo's name as appropriate.

However I get the tenant to sign the a copy of the Prescribed Information form to prove they've received it. I'm assuming that trumps any issue of directors' / witnesses' signatures?

Ian Narbeth

12:01 PM, 20th February 2017
About 2 years ago

Reply to the comment left by "Colin McNulty" at "20/02/2017 - 08:43":

Hi Colin
You write: "I’m assuming that trumps any issue of directors’ / witnesses’ signatures?"

I am afraid the answer is "not necessarily". There is not enough case law on service of Prescribed Information to be sure. Cases in the County Court (where most claims are heard) do not create legal precedent. The problem is if a particular requirement is treated as essential to the notice then failure to meet it may be decisive.

In the context of break clauses, the failure to comply with precise requirements can have serious and unexpected consequences. See e.g https://www.lambchambers.co.uk/news-and-resources/serving-a-break-notice-on-pink-paper-rather-than-blue-a-salutary-tale.htm Break clauses are not an exact analogy but you can see how judges think.

The argument that may be run by a tenant or his clever dick lawyer is that the notice purportedly served was a nullity; it was as if it had not in fact been served even though the tenant had received it. Until we get some definitive judgments from the High Court or better yet the Court of Appeal, the safe course is to be meticulous to ensure the notice is properly served.

I can quite easily see a court waiving a tenant's technical breach but not waiving a landlord's. Call me cynical but I have heard too many stories from barristers who found themselves on the wrong side of a judge who took against the landlord.

Colin McNulty

16:55 PM, 20th February 2017
About 2 years ago

Thanks Ian, would it be right to say that with a Director's signature (i.e. mine) then the tenant's signature becomes the witness? 🙂

Romain Garcin

17:09 PM, 20th February 2017
About 2 years ago

It is not relevant whether the tenant signs to confirm receipt for this purpose.

The prescribed information's requirements are statutory. You may have evidence that your tenant has received your form, but if the contents of the form do not meet the requirements then you haven't in fact given the prescribed information.

Colin McNulty

18:50 PM, 20th February 2017
About 2 years ago

Sorry did I miss a comment Romain, who suggested the contents do not meet the prescribed information requirements?

Romain Garcin

19:04 PM, 20th February 2017
About 2 years ago

Reply to the comment left by "Colin McNulty" at "20/02/2017 - 18:50":

Well in your 8:43 comment you asked whether having the tenant to sign the PI to confirm receipt would 'trump' any issue with the landlord's signature.

The answer is that it wouldn't.

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