2.2 For agents only: accepting instructions from a landlord
2.2.6 Terms of engagement
Agents must give landlords written confirmation of their instructions to manage a property on their behalf.
This must include details of:
– fees and expenses
– business terms
– the duration of their instructions; and
– the extent of the agent’s financial authority to authorise expenditure such as essential repairs/maintenance.
The agent must give these details to the landlord before the landlord is committed or has any liability towards them. The landlord should be given sufficient time to read and understand the agreement before signing.
Terms of engagement must clearly state the scope of the work the agent will carry out and any additional responsibilities. The terms must be fair and must be written in plain and intelligible language.
The terms of engagement should state that a copy of the agent’s complaints-handling procedure is available on request, together with details of the redress scheme to which the agent belongs.
If a landlord signs a contract:
– with the agent present at their home; or
– at another location away from the agent’s premises; or
– by post or online; or
– without having met the agent
the landlord must be given a right to cancel that contract within 14 calendar days from the date of signing.
If the landlord requires the contract to start before the end of this cancellation period the agent must obtain confirmation of this in writing.
Both parties should sign and date the terms of engagement. Any subsequent changes to terms of engagement must be confirmed in writing and signed by both parties.
The agency agreement or ‘terms of engagement’ is an important document as it sets out (or should set out) the arrangements between the landlord and the agent for the agency services to be provided.
Bear in mind that the Unfair Terms in Consumer Contracts Regulations (UTCCR) will apply to all agreements where the landlord is acting as a consumer. The general advice is to assume that the landlord will ALWAYS be acting as a consumer and draft the agency agreement on that basis.
Fees and expenses / Business terms
These need to be very clear so that landlord knows exactly what the service will cost and how the service provided will work.
The case of OFT v. Foxtons was specifically on the agents’ right to commisison even after the agency agreement has been ended. It is now generally accepted that a term requiring commission for a period of not more than two years at a lower rate of interest is less likley to be found ‘unfair’.
The duration of their instructions
Letting agents’ terms and conditions are often opaque on the subject of terminating the agency and the notice periods that need to be given by agents. It is essential that these are clearly laid out as otherwise this could trigger a complaint and reference to the agents Redress Scheme.
The agents financial authority to authorise exenditure
This is also a very important issue. There will be times when the agent will need to arrange for repairs to be done to the property. It is particuarly important that this is addressed where the landlord is going to be uncontactable for a period of time, for example if he is travelling abroad.
Note that under the law of agency, an agent may in certain circumstances have the right to authorise work even if this exceeds the authorised expenditure limit granted to him in the agency agreement (this is known as implied or ostensible authority) . Here the landlord will normally be liable to pay the contractor, but the landlord may have the right to recoup part of this cost from the agent.
The agreement must be written in ‘clear and intelligble language’ but note that if it is not, particuarly difficult to understand clauses may be void under the UTCCR anyway.
The agent must have a complaints handling procedure which should include details of the redress scheme the agent / agency belongs to.
The landlord must also be given time to read and consider the agreement before he signs it. This leads us on to
Cooling off periods
Under the consumer legislation, where the agency agreement is signed other than by the landlord being present at the agents office with the agent present, he may have a right to a 14 day ‘cooling off’ period.
During this time he can cancel the contract without penalty.
Amendments to the contract
Once the contract is signed and dated by the parties they are bound by it. So care has to be taken that the correct information is included. If the wrong agency fee is given or anything else is omitted, the agent will need to get the landlords’ specific agreement before the agreement can be amended.
So sending out an ‘amendments’ to the contract to the landlord in the post will not be sufficient to change it. Unless the landlord sends a copy back which has been signed and dated as agreed.