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ASK THE EXPERT
Q. I own a property that has been managed through an estate agent for several years. The current tenants now want to buy it, and the agent claims I am contractually obliged to pay them commission on the sale. Is this right?
A. Probably not. Yes, your management contract may well include a clause to that effect, but judging by the tone of your question – which suggests that this has come as a complete surprise to you – that clause is almost certainly unenforceable.
Why not? Well, because last year, in a high-profile case brought by the Office of Fair Trading against a well-known firm of London agents, the High Court ruled that such clauses are in breach of the snappily-titled Unfair Terms in Consumer Contracts Regulations 1999.
In essence, the court’s thinking was as follows. To saddle a landlord with the obligation to pay thousands of pounds in commission in the event of a sale - when the agent concerned was neither contracted to sell the property nor played any material part in the sale itself - is basically unfair. It could only conceivably be acceptable if the agent could show that they did everything possible to bring such a clause to the client’s attention and explain it fully, before any contract was signed.
Or to put it another way, this is far too big a deal to be tucked away amid all the small print of a management contract – and if it is, then it’s simply not acceptable under the 1999 regulations. Indeed, experts in lettings law now advise agents not to include it in their terms and conditions at all – let alone try taking anyone to court over it.
So, don’t be fooled by a line like “Well, I’m sorry, but it was all there in the terms and conditions when you signed the contract.” That’s not good enough. Unless the agent can show that this clause was given the prominence to be expected of a major contractual obligation in all their documentation, and unless they can prove that they explained it fully to you before you signed on the dotted line, they really haven’t got a leg to stand on.
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