When does your obligation to letting agents terminate

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    When does your obligation to letting agents terminate

    Hi, I recently had a tenant terminate their tenancy agreement and move out of my property. They took all their possessions and moved back to their country of origin in Europe. The letting agent was advised 2 months beforehand and as far as I was concerned that was the end of my contract with the letting agent as the tenancy was terminated. I did not engage them to find a new tenant as the property needed refurbishment and after that my Mum moved in for a while to help touch it up and get it ready for a re-let as I was busy with University exams and family commitments at the time.

    Some weeks later the tenants contacted me and said they were moving back to England temporarily, they wanted to know if the property was available and if so could they take out a new tenancy agreement with me for 6 months as they can't commit to any longer at this stage as their plans are still not certain.

    Because the contract states that if a tenancy is "renewed, extended, held-over or a new contract taken out" the agents are now claiming that I now owe them 2 years commission (the length of the original tenancy). I agree that if the tenant had remained in occupation and the contract not been terminated this would have been the case, however, I as under the impression that when the tenants vacated this terminated the contract with the agent (and they were given over 2 months notice of this) I cannot see how they are then able to say that this applies. I thought that once a contract finished it would not be any business of the letting agents what I decided to do with my own property.

    Are they able to say that their contract with me lasts forever for this particular tenant and apply this clause? Just wondered whether anyone else had had this experience and if so whether they had to pay up or not. When any previous tenants vacated the property they always told me I needed to sign a new contract with them if I wanted to continue in a contractual relationship so am really confused as to where I stand!

    Look forward to anyone's opinion as this is a new one on me - I am not a full-time landlord - just happen to have let my flat instead of sell it when I met my hubby!!

    Many thanks

    #2
    Originally posted by ct3279 View Post
    Because the contract states that if a tenancy is "renewed, extended, held-over or a new contract taken out" the agents are now claiming that I now owe them 2 years commission
    What does it state in your landlord / agency agreement specifically about what happens if a tenancy is "renewed extended etc.?" This is by what you will be bound, unless it is an unfair term...

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      #3
      I am inclined to agree that where it is a genuine case of the tenancy terminating and then the tenant coming back (i.e. there was no sham involved in the tenant leaving for a day or something like that) it has to be treated as an entirely new letting. In any event, "continuing commission" clauses are frowned upon and though not invalid have to be drawn to the landlord's attention before he signs up with the agent.

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        #4
        Hi, thank you for your responses, they are really helpful.

        This wasn't a sham to get rid of the agents, it was a genuine situation and first the agents instigated court proceedings to say that the tenant remained in occupation, despite me providing evidence from the roofer and in the form of utility bills etc. The tenants left and took all their possessions and furniture. This is what the court case has been based on. They have now come back and agreed that the tenants did terminate the contract, but they say that it is not for long enough so only constitutes a "break in occupation". However nowhere in the contract does it specify what period constitutes "long enough" or what the minimum period is that a tenant must vacate for.

        They told me yesterday that the Judge will want the tenants to give evidence but the Judge's directions questionnaire did not request that so I don't know how they got access to the judge yesterday morning or why the judge has not confirmed that to me so I will ring the court this morning to find out. All he/she asked for is invoices and contracts. However I have provided a lot of extra such as utility bills, witness statement from roofer etc. and email evidence of termination from the tenants. As the case is due on 19th Feb it is not going to be possible to get the tenants to appear at this late stage, and although I should be able to get a witness statement from them the deadline for providing evidence to all parties is 14 days before so that has now been missed.

        They have also told me that they are confident the case will go in their favour and that I should pay up now to avoid costs, although they have offered to accept £1000 rather than £5000. They gave me 24 hours to accept their offer which finishes at midday today so if not accepted case will go to trial. I am terrified of going to court and tempted to pay the lesser figure to make it all go away and have 2 hours to decide what to do!! If I go back and offer to contribute they could just withdraw the offer so not sure what to do! Any thoughts??!!!

        Comment


          #5
          If they are confident the case will go in their favour and are claiming £5000, but say they will accept £1000, that seems to me to show that they are anything but confident they will win. It looks like proceedings have only been begun to achieve what they appear to have achieved, i.e. to induce in you a fear of losing and think you are cutting your losses by paying a lower figure. A reminder that costs will be incurred is another trick to force a settlement. You have to decide if you are going to be infirm of purpose and cave in or be bloody, bold and resolute and take them on.

          I am no litigator and cannot therefore comment on whether it is too late to bring in arguments that you have not yet advanced, but if allowed, I think you need to run two lines of defence.

          The first is that there is a completely new tenancy which is outside the terms of the contract. Whilst a short period between one tenancy starting and another beginning may be indicative of a sham it is not conclusive. For example, a tenant may leave with the intention of taking up residence elsewhere only to find that he is unable to do so - perhaps because the premises have burned down. Here though the situation seems a lot clearer as the tenants left the county taking their belongings with them and contacted you several weeks later. Both the fact of having a clear intention to leave and the longish interval must show that there was no sham.

          The second is that renewal commission terms where the agent is entitled to commission even if he does not negotiate the new tenancy must be clearly drafted and drawn to the client's attention. This was the decision of the court in The Office of Fair Trading v Foxtons Limited.

          It is also not clear how they can be claiming £5000 commission for a six month letting (assuming we are not talking about a property with a very high rental).

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