Agent undercharged outgoing tenant

emma339

My elderly parents own a property which they rent out, with an estate agent to manage it. Whilst doing the property's year end finances for my parents tax return I noticed that the agent had undercharged the outgoing tenant by almost £750 in rent. They acknowledged it as a 'system error' but want to try and retrieve it from the tenant before paying it over to my parents. The outgoing tenant left quite a few months ago. I think the agent should pay it over to my parents straight away as its the agents error, whether they manage to get it from the tenant or not. What would others do?

Voyager2002

I suggest that you start by reading your contract with the letting agent, and see whether you agreed to anything that is relevant to this situation.

saajan_12

Was this
(a) a normal tenancy between the landlord = parents and tenant = occupiers, with the agent just there for admin? ; or
(b) some guaranteed or sublet agreement where parents let to 'agents' on a commercial basis, and the 'agents' in turn let to the end tenants?

Assuming (a) for this answer: 
Usually its the tenant's responsibility to pay rent.. what exactly was the setup here and how did a system error mean that the tenant underpaid? 
The LL may have to go after the tenants themselves, nothing to do with the agents who aren't usually contracted for litigation. 
Depending on the exact mistake by the agents, there might be an argument that their negligence caused the loss of £X rent, but the LL would have to mitigate their costs eg by chasing the tenant and then suing the agent for the costs of chasing. 

theartfullodger

Voyager2002 said:

I suggest that you start by reading your contract with the letting agent, and see whether you agreed to anything that is relevant to this situation.

Whether parents agree.

I'd just start an MCOL small claims, preceded with a letter before action

lincroft1710

If the agent misunderstood their client's instructions and let the property at (e.g.) £1000 pcm instead of £1100 pcm then it is the agent's fault. If the agent let the property at £1100 pcm but only collected £1000 pcm then it is the agent's fault for not collecting the correct amount and also the tenant's fault for deliberately underpaying.


In both cases the agent has been negligent and they should immediately reimburse their client. If the second example is what has actually happened then the agent could pursue the tenant for the shortfall

anselld

Most agency agreements for rental allow for the collection of rent by the agent.  However it is collection as agent of the Landlord.  The rental contract remains between the Landlord and Tenant, so any shortfall in rent is not going to be recoverable from the agent.  The exception being guaranteed rent type arrangements which are less common and where rent the rent would be discounted to cover the void risk.  

emma339

Voyager2002 said:

I suggest that you start by reading your contract with the letting agent, and see whether you agreed to anything that is relevant to this situation.

I am familiar with the contract. The Agent is contracted on a fully managed basis for 'The collection of rent on behalf of the landlord in accordance with the terms of the tenancy'. They have not paid over the full rent up to the end of that tenants Tenancy Agreement

emma339

saajan_12 said:

Was this
(a) a normal tenancy between the landlord = parents and tenant = occupiers, with the agent just there for admin? ; or
(b) some guaranteed or sublet agreement where parents let to 'agents' on a commercial basis, and the 'agents' in turn let to the end tenants?

Assuming (a) for this answer: 
Usually its the tenant's responsibility to pay rent.. what exactly was the setup here and how did a system error mean that the tenant underpaid? 
The LL may have to go after the tenants themselves, nothing to do with the agents who aren't usually contracted for litigation. 
Depending on the exact mistake by the agents, there might be an argument that their negligence caused the loss of £X rent, but the LL would have to mitigate their costs eg by chasing the tenant and then suing the agent for the costs of chasing. 

(A) is correct. Agent acts on a fully managed basis and are contracted to 'The collection of rent on behalf of the landlord in accordance with the terms of the tenancy'. They have not paid over the full rent up to the end of that tenants Tenancy Agreement . The Agent admitted a 'system error' caused them to undercharge the outgoing tenant - I have this in writing. 

saajan_12

emma339 said:

saajan_12 said:

Was this
(a) a normal tenancy between the landlord = parents and tenant = occupiers, with the agent just there for admin? ; or
(b) some guaranteed or sublet agreement where parents let to 'agents' on a commercial basis, and the 'agents' in turn let to the end tenants?

Assuming (a) for this answer: 
Usually its the tenant's responsibility to pay rent.. what exactly was the setup here and how did a system error mean that the tenant underpaid? 
The LL may have to go after the tenants themselves, nothing to do with the agents who aren't usually contracted for litigation. 
Depending on the exact mistake by the agents, there might be an argument that their negligence caused the loss of £X rent, but the LL would have to mitigate their costs eg by chasing the tenant and then suing the agent for the costs of chasing. 

(A) is correct. Agent acts on a fully managed basis and are contracted to 'The collection of rent on behalf of the landlord in accordance with the terms of the tenancy'. They have not paid over the full rent up to the end of that tenants Tenancy Agreement . The Agent admitted a 'system error' caused them to undercharge the outgoing tenant - I have this in writing. 

How is the rent usually collected and what was the system error? Reason I ask is that would affect how much the agent were at fault and what the tenant's argument might be.

However ultimately your claim would be against the tenant. If it cost you £x extra to chase the tenant due to the agent's system error, then maybe you could claim that against the agent, but not the whole rent amount. The fact that they were supposed to transmit the rent to you doesn't make them responsible.