Strangled by ASL management contract

[OneStepLeft]

HNY all.

 

I'm renting out a flat that I own with with my wife, and due to being abroad at the time, we went for the managed service with Halifax. The first tenants were in, then Halifax were bought out by Reeds Rains. The first tenants left, and RR found replacements and we signed an updated agreement with RR.

 

That was in 2010, and now we are back in the UK and because RR do not offer good value for their commission we want to cancel. However the agreement says that if we cancel (giving 3 months notice) but the tenant remains (which we want) they will continue to collect until that tenant moves out.

 

This seems a little restrictive - do we have any options? They've been getting paid for the last 3 years, so have made their money. I would understand if the agreement was limited for the first 12 months, but it seems to be infinite.

 

Essentially, they'll get paid forever until our tenant moves out. Serving notice on the tenant at the same time as RR is absolutely NOT an option.

 

Thanks!

[fkofilee]

Well go round to the house and speak to the tenant!

Thats the best way i can think of it. Get the arrangement changed and paid direct to you.

 

Then throw RR to the curb. They cant evict if you dont want them too.

Remember for an eviction to begin it has to be done by the owner and you are the owner, so they have no right to start eviction proceedings.

[OneStepLeft]

Well go round to the house and speak to the tenant!

Thats the best way i can think of it. Get the arrangement changed and paid direct to you.

 

Then throw RR to the curb.

 

Thanks, but that is the easy part - we are in contact with the tenant. The issue is that RR have a clause in the contract saying if the tenant remains in the property after we terminate our agreement with RR, they still get their monthly commission. If it is in the contract then they presumably feel it is enforceable. Of course we could do it anyway and lie about who lives there, but they have a signed agreement saying they can charge on an ongoing basis.

 

It's a slightly odd paradox to terminate an agreement, where the fees associated with that agreement remain payable, e.g, what is the point of terminating until the tenant moves out, but that's where we are.

 

They cant evict if you dont want them too.

Remember for an eviction to begin it has to be done by the owner and you are the owner, so they have no right to start eviction proceedings.

 

I'm not concerned with RR evicting the tenant, I am saying that we do not want terminate the tenant as a way to get out of the ongoing fees.

[topcat1802]

How long as the tenancy agreement got to run?

[OneStepLeft]

How long as the tenancy agreement got to run?

 

The latest 12 month extension (we have had this tenant for 3 years) to the ASL expired in December, so it's now on a rolling basis. But that agreement is between us and the tenant, not us and RR.

[Steve__M]

In a similar case, the OFT took Foxtons agency to court and won.

 

http://www.oft.gov.uk/OFTwork/consumer-enforcement/consumer-enforcement-completed/foxtons/#.UsV36tcyTis

 

All contracts are different, so you cannot bank on this. But it may be enough to put off your agency. Seems to me that its unlikely that your agent would sue you unless they were sure of their ground.

[OneStepLeft]

In a similar case, the OFT took Foxtons agency to court and won.

 

http://www.oft.gov.uk/OFTwork/consumer-enforcement/consumer-enforcement-completed/foxtons/#.UsV36tcyTis

 

All contracts are different, so you cannot bank on this. But it may be enough to put off your agency. Seems to me that its unlikely that your agent would sue you unless they were sure of their ground.

 

Great - thanks Steve - that seems like very good precedent and in any case the terms of the contract are suitably vague, e.g. it doesn't specify what fees, just that the (variable, based on rent) service fees will still apply.

 

If we terminate and ask agent to transfer deposit to us, it will mean we are being transparent in our intentions, so I hope that they do not make it difficult as a result.

[topcat1802]

I think you should contact the letting agents to let them know you are aware of the High Court ruling on the matter of their unfair terms in the contract. I expect they won't give up without a fight, but it looks like a losing battle as it has been tested in the High Court.

[OneStepLeft]

I've just spent some more time looking into the ruling @ http://www.oft.gov.uk/OFTwork/consumer-enforcement/consumer-enforcement-completed/foxtons/#.UslpwGRdWr8

 

Relating to "Renewal Commission Terms" is only managed to gain a ruling that the terms be transparent.

 

"The ruling and order prohibit the use of sales commission and third party renewal commission in Foxton's letting contract, and require that where renewal commission is to be charged, it must be clearly brought to the consumer's attention - both in terms of the liability to pay it, the circumstances in which it will be payable, and the amount or rate at which it will be charged."

 

Then it becomes a question of whether the lettings agent in this case did that.

 

No montetary amount is mentioned, only that it would be the same as the ongoing commissions for managing the property. Vague enough?

[Steve__M]

What does the term in the contract say?

 

Being brought to your attention must mean more than being written in the contract along with all the standard terms.

[OneStepLeft]

What does the term in the contract say?

 

Being brought to your attention must mean more than being written in the contract along with all the standard terms.

 

Hi Steve,

 

Specific wording below:

 

"Giving not less than three months written notice, to the Agent, the Landlord may terminate the Agreement. If the Tenant's remain in occupation of the Property, the Agent shall charge fees appropriate to the Letting Service for the period of continuing occupation."

 

Elsewhere in the contract the percentage for the management is defined, and it simply states that if the tenancy is extended or renewed (extended I assume meaning it moving to rolling period) then the fees will be due, but that is based on the assumption that we want the continuation of services.

 

It's clear to me at least, via the contract, that the fee would be 9% ongoing, but I am not sure how they'd even know how much we would rent it for. We could say it was 1.00 GBP a month and toss then 9p for doing nothing.

 

That is the crutch of the issue - it makes it impossible to stop them providing a service, because even terminating the service means they still get paid. That's surely the definition of unfair in this case.

 

The question is, doe the working relate to a mid tenancy termination, e.g. if you cancel within the 12 month tenancy, as opposed to if you cancel anytime, disregarding the 12 tenancy as that is a contract between us and the tenant not us and the agent, whereas the contract with the agent has no fixed duration.

 

Further clarification or in fact, a further point of confusion is that the quoted text above says "fees appropriate to the Letting Service". In the contract the Letting Service refers to standard services applicable to tenant finding as well as full management service. So you could argue that fees appropriate to the Lettings Service for the continuing occupation are irrelevant as none of those tasks (deposit management, inventory etc) are applicable anymore.

[hightail]

"Giving not less than three months written notice, to the Agent, the

Landlord may terminate the Agreement. If the Tenant's remain in occupation of

the Property, the Agent shall charge fees appropriate to the Letting Service for

the period of continuing occupation."

Surely they can't charge for more than the period of the tenancy which in a rolling contract is presumably one month. If they had been responsible for signing the tenant on for another 6 or 12 months then that would have been 'the period'.