unfair contract terms - foxtons case

[celi3a]

My letting company has now advised me that because my tenant wants to buy the property that thy want to charge a 1% fee. I was never made aware of this charge and it has come as a complete shock. Can any one help on how I contest this fee.:beagle:

[TUTTSI]

Re: unfair contract terms - foxtons case

Have you got a copy of the orginal contract you signed when you rented out this property through this agent as there may well be something in there regarding commission structure.

It is the same with Emplopyment agencies if you have a temp and then you take them on there is usually something in the T&C's that is signed to say there would be a fee payable.

Take at look at your contract and if you can post it up here - but omitting your personal details we can take a further look at it for you.

Tuttsi

[Amethyst]

Re: unfair contract terms - foxtons case

Also was the tenant that wants to buy the property introduced to the property by the letting agent originally ?



These are the relevant legal bits from the Judgment in July.

"5.0 Sales provisions

5.1 Sale of property to tenant

In the event that the tenant, occupant or licensee of the property enters into an agreement with the owner/landlord to purchase the property, a commission of 2.5% of the purchase price becomes payable by the owner/landlord to Foxtons when contracts for the sale of the property are exchanged. Foxtons reserves the right to defer payment of this commission until completion.

Sales Commission
Under clause 5.1 the landlord is obliged to pay commission of 2.5% to the landlord on the sale price if the landlord agrees to sell the property to the tenant, occupant or licensee. The commission is payable on exchange, but Foxtons "reserves the right" (which is a curious way of putting it) to defer payment of the commission until completion. Again, this is a term appearing in the old terms only; it makes no appearance in the new terms. Nonetheless, the OFT attacks it, and Foxtons defends it as fair. No question of core terms arises in relation to this term.

In the fairness inquiry no serious question can arise in relation to significant imbalance. This is a clause which imposes a potentially large financial liability on the landlord in relation to a transaction in which Foxtons have played no material part. The introduction of the tenant as a tenant hardly counts for those purposes. The liability arises before the landlord receives any sale money, and exists even if the contract for sale is not completed. There is an obvious imbalance.

This is not the sort of clause a consumer landlord would expect when he goes to a letting agent to get a tenant for his property. He is not thinking about selling the property, whether to the tenant or to anyone else. He has agreed to pay a commission to Foxtons for their services in getting him his tenant. 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.

Mr Kent sought to argue that it was sufficiently flagged. I disagree – tucking something like this away in clause 5.1 of the small print, albeit under a heading "Sales Provisions", is not flagging it at all. He also sought to justify the provision on the footing that it would be unobjectionable to have such a provision to cover a case where the prospective tenant changes his mind and decides to buy and not to rent, and it does not materially change that situation if the tenant decides to buy after being in the property for a short while. This was said to demonstrate fairness. In my view it does not. It does not actually cover the case of the would-be tenant who changes his mind, because that person is not yet a "tenant, occupant or licensee", so Foxtons would not get any commission in that event. Once the tenant has signed up, Foxtons gets its letting commission. Clause 5.1 then gives it another commission. If there were a case for saying that a clause like this operated to compensate Foxtons for loss of some other commission that they might otherwise have a justifiable case for claiming or retaining, and of which a sale would deprive them, then that might begin to shift the balance. But that is not this case, and in any event a potentially draconian provision like this would normally require more focus to begin to make it fair.

I therefore find the sales commission clause to be unfair for the purposes of the Regulations.

[celi3a]

Re: unfair contract terms - foxtons case

thanks for the reply this will really help. We were never given a copy of the contract after we signed it so I am not sure if it was even in there. As the tenant paid up front for 6 months and we used the letting agent for a let only service I think we may have a good case to fight these charge. We paid everything up front and we even had to serve notice on the tenant ourselves.

I even asked if they would sell the property for us and they said they did not sell properties and gave me the name of another estate agent. So looking at the judgment we would have never looked for a clause in relation to the sale of the property as they are just a letting agency.

will keep you all updated.