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GDB2222
Posts: 24,660 Forumite
Recently, my wife and BIL rented out a house through an estate agent. They signed a contract with the agent which (apart from the fees for the letting) included a 1.75% + VAT commission if the house were sold to the tenant. At the time, nobody thought the house would be sold, and they did not query that contract term. They have now received an offer from the tenant which they are inclined to accept, but they are up in arms about the size of the commission!
I am aware of a case a few years ago - OFT v Foxtons. The court, was pretty damning about this practice and found against Foxtons. However, the Foxtons contract was lengthy, and the sales commission was slipped into the tiny print. In our case, the contract was fairly short. Does anyone here have any advice?
We have tried negotiating with the agent, but they are adamant that they want their commission if the sale goes ahead.
https://www.gov.uk/cma-cases/foxtons-hidden-fees-in-lettings-agreements-with-consumer-landlords
I am aware of a case a few years ago - OFT v Foxtons. The court, was pretty damning about this practice and found against Foxtons. However, the Foxtons contract was lengthy, and the sales commission was slipped into the tiny print. In our case, the contract was fairly short. Does anyone here have any advice?
We have tried negotiating with the agent, but they are adamant that they want their commission if the sale goes ahead.
https://www.gov.uk/cma-cases/foxtons-hidden-fees-in-lettings-agreements-with-consumer-landlords
No reliance should be placed on the above! Absolutely none, do you hear?
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Comments
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What have you offered them in your negotiations?0
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bob_bank_spanker wrote: »What have you offered them in your negotiations?
Around 30% of what they want.No reliance should be placed on the above! Absolutely none, do you hear?0 -
Well, your link makes it clear (to me at least!) that they shouldn't be getting anything. I would just go back and explain this, using the evidence you have gathered, and that it's either 30% or nothing.0
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Well surely they aren't entitled to anything, the option should be nothing or nothing.0
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If its clear and in the contract unless you take them to court might have to suck it up0
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The Foxton's case referred to hidden fees.
You signed the contract knowing that the clause existed and went ahead anyway. In what way were these fees 'hidden'.0 -
I very clearly remember a regular poster here was a tenant who bought the house she was renting.
In order to avoid the fee, she and her OH collaborated with the LL and actually went to the point of moving out, allowing a quick check-out to be taken by the managing agent and then moved straight back in as the new owner.
Impressively MSE. Needs to be financial incentive for the buyer though!Everything that is supposed to be in heaven is already here on earth.
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How much are we talking here, roughly?
There is nothing stopping them taking you to court whatever happens. The strongest defence would be a new agreement, signed by the estate agent that also waives the previous one. Sounds like this is unlikely though. Perhaps you should have simply kept quiet about the whole thing and hoped they didn't notice.
What is the exact wording (copy and paste) of the contract clause?0 -
How much are we talking here, roughly?
There is nothing stopping them taking you to court whatever happens. The strongest defence would be a new agreement, signed by the estate agent that also waives the previous one. Sounds like this is unlikely though. Perhaps you should have simply kept quiet about the whole thing and hoped they didn't notice.
What is the exact wording (copy and paste) of the contract clause?
The contract wording is:
"If at any time the tenant or any previous introduced individual or entity introduced at any time by us purchases the property, or any interest in it, you will be liable for our firm's fees
at the rate of 1.75% plus VAT of the agreed sale price, payable on or before completion of the purchase."No reliance should be placed on the above! Absolutely none, do you hear?0 -
https://assets.publishing.service.gov.uk/media/555de499e5274a7084000144/mann-judgment.pdf
Paragraphs 104 and 105 (right at the end) deal with whether it is an unfair term. Based on a brief read, the judge's opinion is pretty clear-cut. For example:
In Lord Millett’s terms, I think that the typical consumer would not merely be surprised by it if it were pointed out before he signed up; he would be astonished. It is so far from what he would expect in a document whose opening words thank him “for instructing Foxtons to act on your behalf in marketing your property for rental”, and which thereafter is solely concerned with the consequences and effect of rental, that he would think it had nothing to do with the transaction at all. If invoked against him he would, entirely understandably, think he had been ambushed. It is plainly unfair for the purposes of the Regulations.
So basically, the judge is saying that the typical consumer would actually think the term was probably an error, given the contract relates to services for providing and managing a tenant.
There is a discussion at paragraph 105 of whether or not the clause was sufficiently flagged (i.e., were they 'hidden fees'). The judge does not think so, even though it was under a title "Sales commission". It is not clear whether the clause would have been considered valid if it was sufficiently flagged. The final sentence would appear to suggest otherwise:
in any event a potentially draconian provision like this would normally require more focus to begin to make it fair.
So, you have some arguments at least. Probably worth mentioning that I'm not a lawyer and you should get professional advice. Are you using a conveyancing solicitor? They might be able to quote for looking into this in more detail.0
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