Can agents still charge sales commission if I sell privately to my tenants ?

[lulu88]

Hello,

Can anybody advise whether it is still legal for Estate Agents to charge sales commission if I sell my property to my tenant? Has anyone been in the same situation, could you share what happened/the outcome?

My tenants approached me privately to buy my property and now the agent is threatening legal action to claim their commission if the sale goes through. In the small print of my contract it does say they are entitled to charge 2% commission if this happens, but since the Foxtons vs OFT 2009, ruling that it was unfair to do this, I was wondering whether the agents have any legal basis to claim this commission now.

I pay a monthly lettings fee but manage the property myself. The property is in the process of being sold and I was just wondering if I can do anything to pre-empt any future sales commission claims from the agent.

Many thanks

[jpkeates]

The Foxtons ruling was based on the premise that the charges levied were probably not what the landlord envisaged when they signed the agreement.
They were renewal fees when the agent had nothing to do with the renewal.

These fees seem similar, but I wouldn't have thought you could rely on it 100%.
The agent did introduce the tenant to you, after all, and you did sign the agreement - it might come down to how small the small print was.

I'd go ahead and keep 2% in a savings account just in case.

As far as pre-emption goes, I'd see how they feel about suing you - there's not much you can do to stop them as far as I can see.
It depends on the wording of their contract with you and what they do for you I guess - if you self manage what do they get for their fee?

[Lawcruncher]

Just because something is in a contract does not mean it is enforceable. The view the law takes is that a contract to let and/or manage a property is just that. Anything unconnected with the core contract is unenforceable unless highlighted before the contract was signed.

[lulu88]

Hello,

Thank you for your replies. The fee that I pay is purely from the initial tenancy introduction and then subsequently every year the tenant renews, the agents carry on charging the commission, even though the property is completely managed by me.

The sales commission clause was definitely not highlighted and i guess I was just naive to think that I could ask them to remove the sales clause; or even think that a future tenant would want to purchase the property.

I guess I will have to just wait and what happens once the sale goes though!

Kind regards!

[Hippogriff]

Your original question was whether you can do anything to pre-empt any claim from the Agent. You have arrived at the right position - the ball will be in their court, you need do nothing until you hear from them. Then you can probably choose to ignore their communication, which might fizzle-out or might escalate. If it escalates then you might need to make a decision to interact or do something... but until that time, sit tight. You would expect any Agent worth their salt to at least try get a bone from you... I mean, it's only a standard letter they'll be writing, it's easily worth the cost of a printout and postage to do a bit of fishing.

[PaulF]

Can anybody advise whether it is still legal for Estate Agents to charge sales commission if I sell my property to my tenant? Has anyone been in the same situation, could you share what happened/the outcome?

It might be legal but is it compliant? If clauses concerning a sale do not meet S.18 of the Estate Agents Act 1979 (which I can guarantee will not be the case in a lettings terms of business) then you are at liberty to sell to your tenant without having to pay a sales commission to the agent.

[jpkeates]

That's a really interesting route to explore (even if only for agent frightening purposes).

But I'm not sure that a landlord is asking a letting agent to do estate agency work, as there are no instructions to dispose of or acquire an interest in land relevant to the act.

[PaulF]

Lawcruncher and me (and others) have covered all this in another thread some time ago. The EAA 1979 is quite clear in the requirement for an agent to obtain explicit written instructions from a seller to specifically negotiate a sale, for which certain formats must be included, and therefore would require a brand new contract between agent and seller landlord. Most letting agent contracts just lazily skim over this by stating that if the tenant purchases the landlord will pay the agent £X on completion, and it would be unenforceable.

[lulu88]

Thank you Paul. That is exactly what I have in my lettings contract... just a clause about having to pay 2% commission should we ever sell to our tenants. In fact, our lettings contract will end in mid june, so I could just wait and exchange contracts after this date for extra peace of mind?! ( the tenants are still in mortgage survey stage anyway).

Also, for anyone else that finds themselves in a similar situation, I found this useful article from the IPO Which effectively supports the Foxton's ruling. My agent is a member of this and I have a good mind to put in a complaint about them; but they have only verbally threatened legal action, I probably won't receive anything in writing until the sale goes through.

http://www.tpos.co.uk/downloads/arti...0Sept%2012.pdf

[Lawcruncher]

so I could just wait and exchange contracts after this date for extra peace of mind?!

Not really, no. The term, if valid, would survive. (The important words there are "if valid".)

[irishgem1]

It's totally against the code of practice of the Property Ombudsman for Lettings. See 5j http://www.tpos.co.uk/downloads/TPOE...g%20Agents.pdf