Slightly complicated termination question?

by Readers Question

16:42 PM, 11th July 2018
About 2 months ago

Slightly complicated termination question?

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Slightly complicated termination question?

Hi, I have a slightly complicated version of the question around terminating a letting agency contact.

We were with one letting agent for a number of years. Although there were issues, they found great tenants and we muddled along. The letting agency ceased to trade around 10 months ago, and all contracts were passed over to another local agency. We were informed of this move by letter and follow-up email, and although I suspect at the time I could have taken this as an opportunity to object and move elsewhere, I really had no reason to do so.

10 months on, and we’re having ongoing difficulties with the new agency. They have failed to respond to any of the tenants management issues, necessitating myself spending hours phoning various tradesmen to organise repairs. The latest is a bill for an inspection I was unaware was planned, did not agree to, and hadn’t been informed of the charge. Further, I was at the property myself not long ago dealing with a issue, therefore an inspection was not needed.

I am at a loss to what I pay the management fee for, other than holding on to the tenants deposit, facilitating the monthly rental payment into my account, and emailing me my monthly statement. I am considering terminating the contract with this agency and either moving elsewhere, or taking on the management myself. However, I am not sure where I stand on a few points.

I want to keep the tenants, but this agency did not find them, therefore I feel like I have no moral obligation to them. But are they still tied to the contract? They’ve been in place for a couple of years now, but once these tenants do decide to move on, I may want to use the agency again for tenant-finding and set up, although not ongoing management.

Any advice would be appreciated.

Thanks!

Lindsay



Comments

Sami Houmrani

22:05 PM, 11th July 2018
About 2 months ago

It is very important for a landlord to ensure they abide by the terms of the contract signed by both parties. There may only be a verbal contract but an investigation is required to establish the terms and conditions. This could be terms displayed in the agent’s office or advertised on their website.

Dis-instructing an agent does not affect the agreement made between the landlord and the tenant which in the majority of cases will be an AST. The AST will continue on the same terms unless the landlord or the tenant gives notice, there is a mutual decision to end the contract or the tenancy is ended by a court order.

Most contracts with agents are binding while the tenant (found by the agent) remains in occupation and there may be a penalty if terminating early. If the landlord is deemed to be “acting as a consumer” he or she will have the protection of the Unfair Terms in Consumer Contracts Regulations 1999/2083 (“UTCCR”). This legislation gives greater protection to consumers. An unfair term may be deemed unenforceable even if the disadvantaged party signed a contract where the offending term was expressly stated. It is further worth noting that the entire contract will not be deemed invalid; only the unfair term. The exception will be the unusual circumstance where the removal of the unfair term renders the remainder of the contract incapable of performance.

If an agent is refusing to release you from the contract, or there are not clear terms on how to dis-instruct them legal advice should be sought. Dealings with the agent should be factual and it is vital that the tenant is made aware of your intentions. Do not discuss the reasons for dis-instruction with the tenant; simply explain that future dealings and rent payment should be paid either to the landlord or to a new agent.

It is vital that the deposit is protected at all times.

In the majority of cases, especially full management, the agent would have taken the deposit and registered it with one of the approved schemes in accordance with the legislation. All paperwork and anything concerning the let should be returned to the Landlord together with all rent monies (minus any unpaid commission due to the agent). The deposit is the tenants money and therefore cannot be returned unless:

There is authority from the tenant that the agent may transfer the deposit to the landlord; this could be by way of a letter or going into the agent’s office
and the landlord has re-registered the deposit with a relevant scheme and can show proof of this to the agent.

The prescribed information relating to the new deposit protection should then be sent to the tenant and appropriate proof obtained, certificate of posting or signature from the tenant is best.

Paul Shears

10:12 AM, 12th July 2018
About 2 months ago

I had a similar but not identical issue.
My agent only held the deposit and was also paid to do the inventory.
They did not collect the rent.
When I decided to get rid of the agent, I instructed them to return the deposit to my tenants with whom I had a good relationship.
They pretended that they could not understand the instruction and that this was in part, due one particular member of staff being on holiday.
This dragged on for two months before they finally returned my tenants deposit to them.
Thereafter they had no role.
So perhaps stage one is to instruct them that you no longer require them to collect the rent. If they want to maintain the business relationship they may comply.
After that their fee should drop and it may be easier to get rid of them altogether.

Rob Crawford

11:27 AM, 13th July 2018
About 2 months ago

Hi Lindsay, when you were transferred to the new agents did you sign a new terms of business (agreement)? If so what do these terms say about termination of the agreement? If you did not sign a new terms of business then the original terms would still apply and I suspect due to the number of years the tenants have been in occupation that all you need to do is serve the required notice to the current agents (no reason is required) find a new agent and ask them to manage the transfer of letting agent services. There are many agents out there, you should not be hesitant in changing, do make sure they tick all the boxes, i.e. client money protection, professional body member, property ombudsman member etc. and ideally a recommended agent.


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