Breach of Contract of Not?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Breach of Contract of Not?

    The letting agent procured a tenant and used (and charged for) a tenancy agreement that included an option to renew but with an annual rent increase. When it came time to renew, the letting agent told me the tenant had chosen to renew but had refused the rent increase. It seems the agent did not remind the tenant he had agreed to the annual rental increase by signing the tenancy agreement and the agent was not interested in pushing the tenant on this, just reiterating that he had refused the increase. I was very disappointed in the attitude of the agent who seemed not to be negotiating on my behalf as per the terms of business and was not worthy of the large renewal fee being paid. (I ended up negotiating with the tenant myself).

    Would this failure by the agent to secure the rental increase specified in the tenancy agreement be a breach of the terms of business and sufficient for me to claim our contract is terminated by the breach?

    #2
    That would depend on the terms of business between you and the agent, and you'd have to look at them.

    It is worth a formal complaint because if you're right, the tenant had no choice and the agent works for you.
    I'd personally claim the renewal fee back as they made a complete mess of it.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      I have read through the terms of business and the only thing that I can find directly relating to this is one of the terms that state they will negotiate the renewal terms between both parties on my behalf.

      I have refused to pay the renewal fee but the agents are now threatening legal action.

      I have bypassed the agent since and deal directly with the tenant and use my own tenancy agreement.

      Comment


        #4
        If the tenant had an option to renew he did not have to exercise it if he wanted stay on. Did the agent actually negotiate a renewal taking your instructions?

        Comment


          #5
          I believe the agent just contacted the tenant to ask if he wanted to stay on without communication from me. The option to renew term was written so that the tenant had the right to renew if he expressed this in writing by a certain date. The agent told me the tenant had already done so and that I was obligated to renew the tenancy.

          Comment


            #6
            Neither you not tenant is obliged to renew. Indeed many landlords, me included, prefer not to renew (means you can evict quicker).

            But if they meant you have to pay their commission regardless of renewal, then that may be the case, depending on your agreement with agent (ie not the AST).
            I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

            Comment


              #7
              Originally posted by ABC123 View Post
              I believe the agent just contacted the tenant to ask if he wanted to stay on without communication from me. The option to renew term was written so that the tenant had the right to renew if he expressed this in writing by a certain date. The agent told me the tenant had already done so and that I was obligated to renew the tenancy.
              If the tenant exercised the option he had to do so at the rent agreed. If he purported to exercise it at a lower rent the exercise was invalid and there was no obligation to grant a new tenancy. Whatever the contract with the agent says, I do not see how the agent can be entitled to any commission.

              Comment


                #8
                Originally posted by Lawcruncher View Post

                If the tenant exercised the option he had to do so at the rent agreed. If he purported to exercise it at a lower rent the exercise was invalid and there was no obligation to grant a new tenancy. Whatever the contract with the agent says, I do not see how the agent can be entitled to any commission.
                What reason would I tell the agent they are not entitled to any commission?

                Comment


                  #9
                  Originally posted by ABC123 View Post

                  What reason would I tell the agent they are not entitled to any commission?
                  Before I answer that I need confirmation of precisely what has happened. Is the followng a correct summary?

                  The tenant served some sort of notice on the agent to exercise the option, but said that he did not want the rent to go up. The agent, without reference to you, concluded a new agreement with the tenant without increasing the rent. The agent informed you that he was obliged to grant the new tenancy.

                  Comment


                    #10
                    Coronavirus has brought the letting agent conflict of interest into even sharper focus. Renewal fees are just about the only extra money an agent can get hold of now that the supply of new tenants has all but dried up. If there is a problem tenant he has to choose between the landlords interests or his own.

                    Comment


                      #11
                      Originally posted by Lawcruncher View Post

                      Before I answer that I need confirmation of precisely what has happened. Is the followng a correct summary?

                      The tenant served some sort of notice on the agent to exercise the option, but said that he did not want the rent to go up. The agent, without reference to you, concluded a new agreement with the tenant without increasing the rent. The agent informed you that he was obliged to grant the new tenancy.
                      Not quite. The agent was aware that I was considering not renting out the property any longer after this tenancy (due to personal reasons) and contacted me to remind me of the tenant's option to renew and that I was obligated by law to renew since the tenant had given the required notice to exercise the renewal. It was later that the agent told me the tenant was refusing an increase in rent but wished to renew at the current rent.

                      It got to the point that both myself and the tenant were getting frustrated with the agent and we ended up negotiating the agreement ourselves and I used my own tenancy agreement. The tenant also started paying me directly at this point rather than via the agent [The rent stayed the same but we amended some of the terms of the previous agreement].

                      I feel that the agent did not negotiate on my behalf (as stated he should in the Terms of Business) and since I ended up negotiating terms independently with the tenant, used my own tenancy agreement and the agent was no longer collecting the rent, then I feel the agent did not do anything to deserve the renewal fees (or any future renewal fees as the tenant wants to deal directly with me). The Terms of Business, however, states that the agent is due commission for as long as the tenant remains in occupation.

                      Comment


                        #12
                        Most contractual breaches don't end the contract, they can be repaired by compensation or setting aside the clause and any related clauses.
                        It takes a lot to void an entire contract for a breach - it has to be something fundamental and would usually require the agreement of both parties or a court.

                        There's a continuum; so let's say the agent had agreed to pass on rent within 48 hours of receiving it and, once, it took three days.
                        That's a breach of contract, but it's trivial and no one would expect the contract to simply be ended as a result (and there's probably no loss to compensate for).
                        The agent fails to pass on a month's rent.
                        More serious, but quite easily fixable, and, again, no loss (other than confidence).
                        The agent goes out of business or you die - probably enough to end the contract (unless the agreement covered that situation in some way).

                        The problem is when it's somewhere in the middle.
                        The agent didn't do a good job of negotiating a renewal, and failed to inform you of a key element of the agreement that they were making on your behalf.
                        I don't think (personal view) that that's enough to end the entire agreement.
                        It may be that no fee for that service should be paid as compensation, or that ongoing fees should be limited to what they would have been had the agent's deal gone through.
                        But I don't think it's enough to void the entire agreement.

                        The agent will argue that their business model is based on lots of work from time to time (heavily loaded at the front end) with a small monthly income accumulating to allow them to make money on the arrangement over time.
                        They did the work, they got the best outcome they felt was achievable and it would be unreasonable for them to receive no fees going forward, even though you weren't happy with the outcome.

                        If the agent presses the issue, I'd guess a court will decide, unless you and the agent can agree to some kind of mutually acceptable outcome.
                        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                        Comment


                          #13
                          Originally posted by ABC123 View Post

                          Not quite. The agent was aware that I was considering not renting out the property any longer after this tenancy (due to personal reasons) and contacted me to remind me of the tenant's option to renew and that I was obligated by law to renew since the tenant had given the required notice to exercise the renewal. It was later that the agent told me the tenant was refusing an increase in rent but wished to renew at the current rent.

                          It got to the point that both myself and the tenant were getting frustrated with the agent and we ended up negotiating the agreement ourselves and I used my own tenancy agreement. The tenant also started paying me directly at this point rather than via the agent [The rent stayed the same but we amended some of the terms of the previous agreement].

                          I feel that the agent did not negotiate on my behalf (as stated he should in the Terms of Business) and since I ended up negotiating terms independently with the tenant, used my own tenancy agreement and the agent was no longer collecting the rent, then I feel the agent did not do anything to deserve the renewal fees (or any future renewal fees as the tenant wants to deal directly with me). The Terms of Business, however, states that the agent is due commission for as long as the tenant remains in occupation.
                          Unfortunately not entirely clearcut.

                          Commission disputes can be tricky. They tend to turn on whether the agent was instrumental in securing the deal. If the tenant had exercised the option and a new tenancy was granted at the rent specified in the option there has to be an argument that the agent had no input. The terms of the contract with the agent may of course provide for automatic commission - such terms may or may not be enforceable.

                          That is though not what happened here. If the tenant served a valid notice exercising the option then both you and the tenant were under an obligation to conclude a new agreement at the rent specified. If the notice specified that there was to be no increase in rent then there has to be serious doubt that it was a valid option. In any event there can only have been two possibilities: (a) the notice was valid and there was an agreement to enter into a new agreement at the rent specified (b) the notice was invalid and there was no such obligation. What was not a posibility was that there was an obligation to enter into a new agreement at a rent to be agreed; that would be void as an agreement to agree. Now if an agent uses an agreement containing an option to renew he must be presumed to be able to establish with reasonable certainty whether a notice exercising an option is valid. Given the foregoing he therefore either had to advise you that the exercise of the option was valid and what flowed from that, or that the notice was invalid. He did neither. Whether it was intentional or not is immaterial; he simply did not give you proper advice. That on its own ought to be enough to rule out any commision.

                          However, commission disputes can be tricky. There may be some devil in the detail which entitles the agent to commission. Tell the agent if he threatens to sue that you will counterclaim for the difference between the rent you agreed and the rent you would have got under the option.

                          What we have here is a classic case of unnecessary complications being introduced into transactions which should be kept straightforward. Whilst not suggesting that there is never a case in short term residential lets for options, rights to break and the like, they are best avoided. If the situation warrants them get a lawyer to do the drafting. If the expense of a lawyer is not considered justifiable it is a strong indication that the complication should be avoided. Options to renew are especially fraught with danger as it is all too easy to grant a perpetually renewable lease which the law converts to a 2000 (yes, two thousand) year term.

                          Comment

                          Latest Activity

                          Collapse

                          • How to choose letting agent
                            by LMK
                            Hi. I am just getting ready to rent my property out for the first time.
                            I am planning on getting a few letting agents around, seeing what they say, what they can offer (planning on going for the full management option), their prices etc.
                            But is there anything in particular that I should...
                            10-07-2020, 18:36 PM
                          • Reply to How to choose letting agent
                            by Beswick
                            If I could go back in time, I'd advise 'the old me' to do swot up on all the regulatory stuff and do everything myself. These forums are a great place for info, as is the Moneysaving Expert website. Find the relevant tradesmen (personal recommendation is best) too.

                            I've found that if...
                            11-07-2020, 11:48 AM
                          • Reply to Letting agent cease fee = 12 months fees.
                            by Lawcruncher
                            Refer the agent to paragraph 5 of the list of terms which may be regarded as unfair set out in Schedule 2 to the Consumer Rights Act 2015:

                            A term which has the object or effect of requiring that, where the consumer decides not to conclude or perform the contract, the consumer must pay the...
                            11-07-2020, 10:11 AM
                          • Letting agent cease fee = 12 months fees.
                            by lamblord
                            Hi All,

                            I became a landlord back in January 2019 when I moved in with my partner, and we rented out my property. I used a letting agency, as I didn't really have the time to invest in learning how to manage a property myself. The letting agent got 3 tenants in on 12 month agreement, that...
                            08-07-2020, 15:15 PM
                          • Reply to How to choose letting agent
                            by jpucng62
                            I would visit them and have a chat about their approach, charges etc. The monthly charge is important, as is how they charge for deposit protection (this can vary quite a lot). Ask about their approach to repairs etc and choose one which fits with what you want AND offers good value.

                            Remember...
                            10-07-2020, 22:20 PM
                          • Reply to How to choose letting agent
                            by Mrs Mug
                            See the link below on how to select a letting agent.

                            https://forums.moneysavingexpert.com...mment_67759939
                            10-07-2020, 19:47 PM
                          • Reply to Letting agent cease fee = 12 months fees.
                            by Beswick
                            Tell the letting agent that you feel the charge is, given the level of service you have received, excessive. Tell them you are happy to pay 3 months' fees and no more. See how they respond.

                            If you're still not happy, try approaching the redress scheme the agent is a member of. They can...
                            10-07-2020, 18:09 PM
                          • Reply to Letting agent cease fee = 12 months fees.
                            by DPT57
                            Nothing attached.

                            Such termination clauses are, however, pretty stanard in agency contracts.

                            Bear in mind that if these are unrelated tenants, the property will be an HMO and the full HMO Management Regulations will apply.
                            10-07-2020, 17:15 PM
                          • Newly refurbished house to let- fully managed or finder fee only?
                            by Lots on
                            I have been a landlord, initially accidental (had to manage fathers properties when he became ill) then by choice. Only 2 properties, a student flat which is fully managed and a house which I inherited with tenants in situ and no letting agents, it was quite hands off but amicable. They have moved...
                            06-07-2020, 21:46 PM
                          • Reply to Newly refurbished house to let- fully managed or finder fee only?
                            by jpkeates
                            And the tenant's free day may not coincide with yours.

                            There are five hidden benefits to using an agent:
                            1 - There are usually several people to answer the phone, make calls and arrange things at an agent, while if you DIY, there's you.
                            2 - It's much easier to say no to things...
                            09-07-2020, 10:04 AM
                          Working...
                          X