Agent's Commission on Tenant's Renewal??

[HP Mum]

Hello

 

I have a question here about my liability to pay an estate agent's commission.

 

3 years ago I rented a property to someone for a few months. The Tenant was brought to me via an estate agent, I paid the agreed commission and the Tenant came and went.

3 years later the Tenant wants to come stay in my property again.

Trouble is that I have been approached via a different estate agent.

I have gone back and read the T&Cs of the original Letting Estate Agent and it says quite clearly that Landlord will be liable to pay their commission if the Tenant re-rents at some point in the future. I have copied and pasted their T&Cs below.

 

So what do I do?

 

The Tenant is high profile and it might easily come to the attention of the original Agent that they are re-renting my property. Could they demand commission ? Legally that is. Or after 3 years would their original contract be deemed ended ?

I don't obviously want to end up paying 2 lots of commissions.

 

Or should I just go back to the 2nd agent and say I can't deal through them?

 

This is the Original Agent's T&Cs:

"Commission and other charges are due and payable by the Client in accordance with paragraph xx hereof on any letting of the Property to a Tenant and references to the Tenant

include:

• any “associate” of the Tenant as defined in Section 303 (3) of the Income and Corporation Taxes Act 1970.

• any close company as defined in Section 282 of the Act in which that person or any associate as defined is a participator, as defined in Section 303 (1) of the Act.

• any company (or any connected person or entity of that company) which shall be the employer, former employer, guarantor or former or proposed guarantor of that person.

• where the Tenant is a company, any person employed by the company or for whom the company is, or has become, or proposes to become guarantor and includes any company which is a holding company of the company or

subsidiary company of the company or a member of the same group, as defined in Section 272 of the Act, as the company.

• any person or entity introduced by the Tenant or the occupier of the Property within the previous six months.

• any person who shall be introduced to the Client as a Tenant by XX who subsequently rents any Property from the Client, whether or not XX have been instructed to let that Property"

[Steve__M]

Does this clause appear to be a lot about protecting the agent from, say, someone who lets as a "corporate let" ie. where one company may provide a series of tenants. This clause seems to be designed to prevent the company and LL from cutting the agent out of the deal.

 

There is a bit of case law that ought to be helpful to you.

 

One is a recent case involving Foxtons in which it was deemed that Foxtons terms that required LL to continue paying commission even when Foxton's was not involved in a tenancy renewal were unfair.

 

I can't see that they would get anywhere if they really had no involvement in this new letting. But I am not a lawyer.

[HP Mum]

Thanks Steve.

I am aware of the July 09 OFT v Foxtons case.

It is this clause that I am worried about:

 

• any person who shall be introduced to the Client as a Tenant by XX who subsequently rents any Property from the Client, whether or not XX have been instructed to let that Property"

I read this clause as preventing me having the same tenant again, even if handled by another agent in future. But I might be wrong. Which is why I want some legal advice on this....

Thanks...

[HP Mum]

Just to recap, the issue I am worried about is that I do not want to pay commission to one agent and then find i am legally obliged to pay 23% more to another agent...

WOuld be fantastic if anyone has any legal standing on the length of time an agent's T&Cs can remain enforceable...

[MrShed]

What are you looking for over and above the Foxton case? I am not neccessarily up to speed with that case, but surely it would apply?

[HP Mum]

thanks MrS.

I think I am right in the F case being that their Contracts were deemed to be unfair in terms of roll-over commission and commission on sales to tenants.

But I am not sure if the ruling applies to other agents too?

And I am not sure on whether a precedent has now been set on battling unfair commission demanding clauses?

To be honest, I don't want to get in a fight either. I just want a simple life !!

 

I guess what I am looking for is guidance on whether the original agent could demand a further large % commission from me, as this was a clause in their Agreement in 2007.

The other option that I am looking at, is to go back to the individual/company and tell them, honestly, how nervous I am about dealing with a new agent and subsequently being held liable for 2 huge commissions. I could suggest they deal through the original agent.

I have kind of pre-empted this by asking the original agent what their commission would be if I had been contacted directly by someone and needed to deal through an agent. It was a sort of subtle way of asking about their commission rate without divulging that it was an old tenant they had introduced. However, I do realise that the original agent could then backtrack and say that whatever % we have just discussed is not applicable as they had originally found the tenant... Oh dear, what am I getting involved in !!

Not sure of the politics on this situation; just trying to tread carefully....

[MrShed]

The precedent will not apply to only one agent, and it is unlikely to refer to one specific set of terms - more the general concept.

 

As this was at the high court, a legal precednt has indeed been set.

 

However, the devil as always is in the detail.

 

I would advise reading this link (in particular the note numbered 4):

 

OFT v Foxtons- The Final Order Painsmith Landlord and Tenant Blog

 

What you want is for someone on here to tell you that this term is unenforceable. Unfortunately, none of us can tell you that, either in a legal or non-legal capacity.

 

Ultimately, this decision will be up to a judge in a courtroom, on the balance of the evidence.

 

My reading of part 4 indicates to me that generally speaking such clauses ARE enforceable, and so I wouldnt hold out too much hope. However, you can always do it, and simply not pay - inviting a claim against you to decide. If nothing else, this will put the onus on them to claim against you, which they may not bother to do...

[PainSmith Solicitors]

HP Mum

 

Instead of following on the OFT v Foxtons route we would suggest that you look at the case of Foxtons v Pelkey Bicknell which we have also mentioned on our blog. The phrase "introduced" has been the subject of judicial interpretation in a manner which should assist you.

[MrShed]

HP Mum

 

Instead of following on the OFT v Foxtons route we would suggest that you look at the case of Foxtons v Pelkey Bicknell which we have also mentioned on our blog. The phrase "introduced" has been the subject of judicial interpretation in a manner which should assist you.

 

Did you get a linkback PainSmith?

 

Good to see you on the forum!

[PainSmith Solicitors]

We did, yes.

[MrShed]

OP - without blowing smoke up their rear end, PainSmith are very well known in this industry. As such, the above is some invaluable guidance

[caro]

OP - without blowing smoke up their rear end, PainSmith are very well known in this industry. As such, the above is some invaluable guidance

 

Absolutely. Very good to see you on CAG Painsmith.

[HP Mum]

Thank you all.

I have read everything so far. And am still floating on what is the best course of action.

 

But I have moved forward a bit.

 

I contacted a representative of the Tenant and explained my concerns. This rep passed my concerns to Tenant's lawyer and the Company ultimately responsible for paying the rent. I was subsequently advised to tell the Company that I was already committed to using another agent; not the 2nd agency.

 

So then I had a discussion with the Company.

They clearly said that the Tenant had requested my property and given them my # and address. They regularly use the 2nd agency as a property finder, but in this case they gave the property (mine) to the 2nd agency. The Company then concluded that I am free to use whichever agent I wish to use, as long as their client, the Tenant, still gets the property - but I must just let the 2nd agent know my intentions...

 

Of course, I have been ignoring the calls of the 2nd agency whilst I get all this sorted with everyone else and whilst I figure out the very best route for ME.

 

I have texted the Tenant and advised that all is ok with the house, just sorting out the paperwork. To which Tenant has replied that he is happy to be in my property this summer....

 

I have written to the Company confirming the details of our conversation; that they gave my details to 2nd agency, that I am free to use whichever agency I wish, that happy they understand my position etc ...

 

The 2nd agents have obviously been given the low down by the Company and are clearly panicking and fuming that they will lose out totally, despite it being the Company who had given them my details in the 1st place !! The 2nd agency have now written to me, mentioning spoken to their solicitors, who have allegedly said they think it unlikely the 1st agency would make a claim against me after 3 years. They have also lowered their commission to try to tempt me to continue business with them...

 

I should be honest here and say that 2nd agent is asking for a HUGE commission. Far more than the 1st agent did 3 years ago. I had refused to deal with them right from the beginning on the basis that their high commission could not be justified:- clearly the Tenant had stayed previously, had contacted me directly too, and the 2nd agency could not possibly claim they were introducing him to me. The sort of fee they were (are) trying to demand is almost an annual salary. Which infuriates me anyway.

 

The crux of this now is 3-fold:

 

- Do I just ignore the 2nd agency and/or get a solicitor to write a strong letter advising them that they & I had no business relationship and there was no introduction of Tenant ?? And if they decide to issue a claim for not giving them the business, just refute it as and when the Claim arrives on my doorstep ?

 

- Do I go back to 1st agent and just sit round the table and do a deal offering them something but far, far less than the 2nd agency was demanding and also potentially far, far less than the 1st agent charged 3 years ago ?

 

- Do I by-pass all agents, get a solicitor to draw up the contract and the Agreed Terms of Offer (already prepared) and end up paying no commission, just the solicitor's fees.

And if I then get 2 claims - 1st & 2nd agency - the solicitor can help me fight !!

 

Phew.

Does this make sense?

Any illumination on this revised current state of affairs ?

Advice much appreciated, please...

 

ps - don't forget the clocks change tonight...

[HP Mum]

As an extra thought, I guess if I chose the latter option then I gather PS is the best to help me

[caro]

Note this from the Painsmith website regarding the case of Foxtons v OFT.

 

 

Provided that their terms of business and charges are expressed in “plain and intelligible language” it will be much easier for them to make the case that their charges are a part of an overall package and should be exempt from a consideration of unfairness

 

It seems that you have understood the contract so I would suggest it's in plain intelligible English.

 

It's your property and your agent, so tell these people to go through them. It has to be on your terms.

[HP Mum]

Thank you Caro.

 

You are right. It is my house and I know the person who wants to rent it. I would like to do the "deal" my way, incurring the least amount of costs / charges and not have some agent I know nothing about try and dictate what I can and can't do and then try to charge me an extortionate amount. Especially when I have tons of debts to deal with and this "deal" will help me clear them.

I tend to fret. CAG is great for reassurance and directing towards the right path

[caro]

With all due respect to Painsmith, CAG helps avoid solicitors bills too - especially when you can't afford them.

[HP Mum]

Thank you again Caro.

Though I might still need a solicitor to get rid of the 2nd agency...

Cheers

[MrShed]

I'm totally confused on this whole scenario, but have you EVER had an agreement with Agent 2 to do with letting the property?

[Kentish Lass]

My twopenneth would be that

 

(a) you have no contract with agent 2

 

(b) that they did not introduce said tenant to you

 

© that given (a) and (b) above, on what could they possibly base any kind of claim against you?

[MrShed]

My twopenneth would be that

 

(a) you have no contract with agent 2

 

(b) that they did not introduce said tenant to you

 

© that given (a) and (b) above, on what could they possibly base any kind of claim against you?

 

From my reading of it, thats certainly the case KL.

[HP Mum]

I am so sorry to have confused you MrS !

I thought I was painting a lucid picture, but I guess I just clouded it....

 

The answer is NO I have never had an agreement with 2nd agent.

They were given my # by the Company who will pay the rent on behalf of the Tenant, and I understand the Tenant gave the Company my #.

But I do not want to deal with them.

Their commission is too high and I was worried about the possibility of 1st agent, from 3yrs ago, popping up and claiming a commission too because they originally introduced the Tenant 3yrs ago.

 

I get the feeling they are trying to make a fast buck out of me, for doing nothing. I work very hard and have sacrificed a lot in recent years to try and prevent my house of cards tumbling down. I really resent someone coming along and thinking they can have a part of what I have worked so hard for, without doing anything more than a quick tweek on a pre-drafted computer contract and then pressing print.

 

The reason I worry about if they might have a claim against me is that they DID contact me about renting my house to the Tenant. I have just decided not to do business with them. I hope it is that simple....??

[MrShed]

Right OK with you.

 

They have ABSOLUTELY no claim against you on that basis. Farcical that they even consider saying that they do!

[caro]

HP Mum.

 

I have a client who wants to rent your house.

 

Now if you don't want to do business with me pay me a shed loads of money or I'll take you to court.

[HP Mum]

Caro,

Put like that, it sounds so simple !!

 

I feel reassured now.

 

On with the job of securing contracts my way, tomorrow