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View Full Version : Obliged to offer tenancy or not, your views



betteroffer
22-02-2010, 14:05 PM
I have a house that has been on the rental market for a while. An offer from a prospective tenant came in through the agent I had appointed. The offer was not attractive on the basis that the tenant would be coming through a scheme where the deposit is insured and the rent is paid in arrears. Despite not having any other offers I instructed the agent to 'proceed' that is, to request the AST from the scheme as it would be them that provides it. A provisional moving in date was set for 1 week later. No deposit, holding or otherwise, was ever put down.

A better offer came in through another agent where the prospective tenant offered the asking rent, 4-weeks rent as deposit and 1 month rent in advance. A holding deposit has been put down.

I decided to proceed with the second better offer and the first prospective tenant is now kicking up a fuss. The agent is putting the ball in my court and blaming me for rejecting the first prospective tenant.

The first prospective tenant has just told the agent that she had given her current Landlord notice. Very short notice by the sounds of it. The same tenant also says that the Landlord has found another tenant for her current house, which I find rather unbelievable because my 'please proceed' email was dated 18 February 2010. The same tenant has sold her cooker and some possessions in view of my request to proceed to contract.

I have not had sight of the contract (AST) from the scheme nor have I signed it.

I am annoyed that the agent provided a copy of my email to them to the prospective tenant. This seems to be a breach of confidentiality and possibly a breach of their duty of care to me as a Landlord.

What are your views and experience on the above?

Lawcruncher
22-02-2010, 14:23 PM
Whether you have a contract with the first applicant depends on what went on between the applicant and the agent. What was agreed exactly?

tom999
22-02-2010, 14:25 PM
I am annoyed that the agent provided a copy of my email to them to the prospective tenant. This seems to be a breach of confidentiality and possibly a breach of their duty of care to me as a Landlord.The agents may be in breach of the Data Protection Act. If you're unhappy with their service, terminate their contract (and report to ICO, if applicable).

P.Pilcher
22-02-2010, 14:27 PM
Well, I am not suprised that your first prospective tenant is bitching about your refusal to accept him/her This is because they are not able to offer the usual terms (i.e deposit and 1st. month's rental in advance) so they are having much difficulty in finding rental property on the terms that they can offer. They even have the cheek of offering YOU an AST that they are prepared to accept. It should be the other way around! If you have not signed an AST and your agent has not done so on your behalf (whether or not he has been authorised by you to do so) then you have nothing to worry about. I doubt very much that this tenant has offered notice to their existing landlord - they are merely applying as much moral pressure as they can to make you accept them as a tenant. I wouldn't touch them with a bargepole!

P.P.

betteroffer
22-02-2010, 14:37 PM
Thanks for your reply.

I could not be entirely certain what was said/done by the Agent but they have emailed me a few times stating whether I wish to proceed with the applicant, these were on 18 Feb. On 17 Feb the Agent said the applicant came into the agent's office with proof of residency (at the agent's request, not mine) and the agent's email states "but obviously need to go ahead from you before we can do anything"

On 18 February I emailed "Please proceed with X application"

The above is all the applicant is relying on. My email to the agent was merely to progress the application further and was by no means a final decision until I have sight of the AST and signed it.

The applicant was, in my view, foolish to tender notice and start notifying utilities without a tenancy having been secured. I do not know what the terms of that AST will be because the AST is provided by the scheme who also broker the rent guarantee and deposit insurance.

The agent has stated in an earlier email when I said that I was 'considering other offers...' that I am entitled to consider my own best interests.

betteroffer
22-02-2010, 14:39 PM
The agents may be in breach of the Data Protection Act. If you're unhappy with their service, terminate their contract (and report to ICO, if applicable).

I will deal with the Agent later, they will get the sharp end of the stick from me when I have dealt with the tenant. The agent clearly was trying to pass the buck

betteroffer
22-02-2010, 14:45 PM
Well, I am not suprised that your first prospective tenant is bitching about your refusal to accept him/her This is because they are not able to offer the usual terms (i.e deposit and 1st. month's rental in advance) so they are having much difficulty in finding rental property on the terms that they can offer. They even have the cheek of offering YOU an AST that they are prepared to accept. It should be the other way around! If you have not signed an AST and your agent has not done so on your behalf (whether or not he has been authorised by you to do so) then you have nothing to worry about. I doubt very much that this tenant has offered notice to their existing landlord - they are merely applying as much moral pressure as they can to make you accept them as a tenant. I wouldn't touch them with a bargepole!
P.P.

My thoughts entirely and I am standing my ground because if this is how they portray themselves to be then I have no desire for them now. If the applicant had put down a holding deposit I would have then honoured the agreement.

The agent knew I was hesitant with the rent being paid in arrears but the agent, with his usual sales patter, was trying to convince me the applicant is a safe bet because the rent is insured. I was not really that bothered about the insurance because this can be obtained easily at low cost. The agent's fee would have been 4 weeks rent, plus inventory cost plus VAT and this I would have to pay out of my pocket and not from any advance rent payment.

The agent dealing with the second offer charges 3 weeks rent inclusive of VAT. Any landlord would go for that offer especially when they put down a £200 holding deposit.

I guess the applicant is annoyed because they have lost out on a newly developed house.

Lawcruncher
22-02-2010, 15:11 PM
Just to repeat, what is important here is what happened between the agent and the applicant. Since there is no question of the agent not being your agent, the applicant was entitled to assume that the agent had power to agree a tenancy. The sole question therefore is whether the agent did anything that amounted to agreeing to grant a tenancy and remember that it does not have to have been agreed in writing. All the following are irrelevant:

1. Whether you gave the agent the go-ahead or not and what the agent did or did not say to you at any time.

2. What arrangements the applicant made concerning his existing tenancy.

3. Any suspicions you may have.

4. The fact that a better offer came along or that the terms of the first offer were unusual.

JK0
22-02-2010, 15:43 PM
Just to repeat, what is important here is what happened between the agent and the applicant. Since there is no question of the agent not being your agent, the applicant was entitled to assume that the agent had power to agree a tenancy. The sole question therefore is whether the agent did anything that amounted to agreeing to grant a tenancy and remember that it does not have to have been agreed in writing. All the following are irrelevant:

1. Whether you gave the agent the go-ahead or not and what the agent did or did not say to you at any time.

2. What arrangements the applicant made concerning his existing tenancy.

3. Any suspicions you may have.

4. The fact that a better offer came along or that the terms of the first offer were unusual.

My father had a tenant try this on once. A tenant agreed a lease on an office, and the agent stupidly gave him a key to move some stuff in. On reading the documents my father found out he was an estate agent who he refused to have as tenants.

The tenant's solicitor wrote claiming stationary costs, telephone connections, signage etc. totalling £5000.

My father wrote back pointing out that the lease had never been signed, and that the agents let them in without his permission. The case was dropped, and we never heard from them again.

westminster
22-02-2010, 16:34 PM
On 18 February I emailed "Please proceed with X application"

The above is all the applicant is relying on.
Notwithstanding whatever the agent may have agreed on your behalf, it seems to me you agreed to proceed with the application, not with the actual tenancy. I don't see how could you agree the tenancy before having seen the tenancy agreement - it might have contained terms you disagreed with. I presume you were also planning to carry out some credit/reference checks.

Lawcruncher
22-02-2010, 16:47 PM
The case was dropped, and we never heard from them again.

That does not change the law! The tenant had a case.

I am no expert on the law of agency, but I think it goes like this:

If someone (A) holds himself out to be the agent of another (B) and is in fact not the agent of B then anything that A agrees with C is not binding on B unless ratified by B. C's remedy is to sue A for breach of warranty of authority.

If A is the agent of B then:

(a) anything that B authorises A to do, A may do and if he does is it B is bound by it;

but also,

(b) anything A does without B's authority or even if B expressly forbids it, will bind B if it is the sort of thing that comes within A's ostensible authority. If A is a letting agent then A's ostensible authority extends to signing a tenancy agreement or otherwise creating a tenancy because that is the sort of thing that letting agents do. C is not put on enquiry as to what precise authority A has. If B is aggrieved by any action that A does on his behalf without express or implied authority then B's remedy is to sue A.

JK0
22-02-2010, 16:53 PM
That does not change the law! The tenant had a case.

I am no expert on the law of agency, but I think it goes like this:

If someone (A) holds himself out to be the agent of another (B) and is in fact not the agent of B then anything that A agrees with C is not binding on B unless ratified by B. C's remedy is to sue A for breach of warranty of authority.

If A is the agent of B then:

(a) anything that B authorises A to do, A may do and if he does is it B is bound by it;

but also,

(b) anything A does without B's authority or even if B expressly forbids it, will bind B if it is the sort of thing that comes within A's ostensible authority. If A is a letting agent then A's ostensible authority extends to signing a tenancy agreement or otherwise creating a tenancy because that is the sort of thing that letting agents do. C is not put on enquiry as to what precise authority A has. If B is aggrieved by any action that A does on his behalf without express or implied authority then B's remedy is to sue A.

If the tenant had a case, and had already gone to the expense of consulting a solicitor, why would the case be dropped? Obviously because the solicitor told him he did not have a leg to stand on.

Regarding this case, I was going to quote Westminster's post before yours here, but can't work out how to do it.

betteroffer
22-02-2010, 18:31 PM
Notwithstanding whatever the agent may have agreed on your behalf, it seems to me you agreed to proceed with the application, not with the actual tenancy. I don't see how could you agree the tenancy before having seen the tenancy agreement - it might have contained terms you disagreed with. I presume you were also planning to carry out some credit/reference checks.

That was my intention as expressed in the email to proceed the application which should not be construed as to mean a final conclusive decision arising to a security of tenure but to proceed to the next stage, that is, to obtain copies of the proposed contract from the scheme operators. The scheme operator was in fact acting on the behalf of the applicant. The situation may have been different if my agent was to prepare the contract as I would have knowledge of the full terms.

References were checked by the scheme operators.

betteroffer
22-02-2010, 18:43 PM
That does not change the law! The tenant had a case.

I am no expert on the law of agency, but I think it goes like this:

If someone (A) holds himself out to be the agent of another (B) and is in fact not the agent of B then anything that A agrees with C is not binding on B unless ratified by B. C's remedy is to sue A for breach of warranty of authority.

If A is the agent of B then:

(a) anything that B authorises A to do, A may do and if he does is it B is bound by it;

but also,

(b) anything A does without B's authority or even if B expressly forbids it, will bind B if it is the sort of thing that comes within A's ostensible authority. If A is a letting agent then A's ostensible authority extends to signing a tenancy agreement or otherwise creating a tenancy because that is the sort of thing that letting agents do. C is not put on enquiry as to what precise authority A has. If B is aggrieved by any action that A does on his behalf without express or implied authority then B's remedy is to sue A.

I can see where you are coming from here, however, having discussed this with the agent, who has confirmed that my email was not shown or copied to the applicant/third party. We only need to be concerned with the law of agency if there is an issue as to whether the agent has gone beyond my instructions.

The agent has confirmed that he has only carried out my instructions, that is, to proceed with the application i.e contact the scheme operator to request they send the AST agreements for my perusal and signature. No copies of the AST agreement were sent to the agent.

As mentioned earlier the applicant is only relying on what they believe to be a binding acceptance as mentioned in my email as quoted in earlier posts which only states "Please proceed with X application". There is nothing else in writing, including a holding deposit agreement.

They say they have spoken to a solicitor who, according to the applicant, has advised that I have made a 'promise' and they say I should honour it or they will take it to Court. One would think they would be wise to spend their time finding alternative accommodation.

westminster
22-02-2010, 18:54 PM
They say they have spoken to a solicitor who, according to the applicant, has advised that I have made a 'promise' and they say I should honour it or they will take it to Court. One would think they would be wise to spend their time finding alternative accommodation.
Sounds like a possible 'professional' tenant, i.e. out to milk the system from every angle. I'd say you've had a lucky escape, and assuming the agent is telling the truth I can't see that the would-be tenant has any grounds to claim.

BTW I wouldn't trust the 'scheme's' tenant checks. If ever a similar situation arises, get your own checks done.

P.Pilcher
22-02-2010, 18:58 PM
As I posted earlier, I wouldn't touch such a tenant with a bargepole!

P.P.

betteroffer
22-02-2010, 19:06 PM
As I posted earlier, I wouldn't touch such a tenant with a bargepole!

P.P.

I am not going to take on the first applicant. My decision has been made. I am just preparing for any consequences from my retracted acceptance, if it could be construed as acceptance or merely an agreement to progress further.

Unfortunately because of the area and the property I have to consider those on HB.

Lawcruncher
23-02-2010, 10:03 AM
If the tenant had a case, and had already gone to the expense of consulting a solicitor, why would the case be dropped? Obviously because the solicitor told him he did not have a leg to stand on.

I expect it came down to economics. In the first flush of indignation people often consult a solicitor. The solicitor may have said: "You have a case. You are claiming £5000. If you instruct me my costs will be a couple of grand at least and may well exceed the amount you are claiming. Whilst you have a good case no litigation is certain. Do you want to send good money after bad? Tell you what, I'll get a letter off and we'll see what happens. If they don't pay up or make an offer I suggest you forget it or do it yourself through the small claims procedure."

The law of agency is as it is to maintain confidence in business transactions. Absent any shady dealing between the agent and the applicant, if a duly appointed letting agent allows someone into possession and accepts rent there is a tenancy binding on the landlord.

Lawcruncher
23-02-2010, 10:34 AM
I can see where you are coming from here, however, having discussed this with the agent, who has confirmed that my email was not shown or copied to the applicant/third party. We only need to be concerned with the law of agency if there is an issue as to whether the agent has gone beyond my instructions.

The agent has confirmed that he has only carried out my instructions, that is, to proceed with the application i.e contact the scheme operator to request they send the AST agreements for my perusal and signature. No copies of the AST agreement were sent to the agent.

As mentioned earlier the applicant is only relying on what they believe to be a binding acceptance as mentioned in my email as quoted in earlier posts which only states "Please proceed with X application". There is nothing else in writing, including a holding deposit agreement.

They say they have spoken to a solicitor who, according to the applicant, has advised that I have made a 'promise' and they say I should honour it or they will take it to Court. One would think they would be wise to spend their time finding alternative accommodation.

All noted. However, the absence of writing is not necessarily fatal to the applicant's case since a contract to grant a tenancy for three years or less can be oral. The whole thing turns on exactly what went on between the agent and the applicant. Without knowing precisely what happened in what order it is impossible to say if a binding contract arose.

It has been instructive in this thread to note how, on the very flimsiest of evidence, the disappointed applicant has been progressively denigrated.

betteroffer
23-02-2010, 13:16 PM
...However, the absence of writing is not necessarily fatal to the applicant's case since a contract to grant a tenancy for three years or less can be oral....

My research on this point is showing that this principle does not apply to a tenancy at a future date, therefore only applies when in actual occupation.

betteroffer
23-02-2010, 13:20 PM
...if a duly appointed letting agent allows someone into possession and accepts rent there is a tenancy binding on the landlord.

That seems to confirm my point and does somewhat contradict your earlier arguments. The agent nor I have not given the first applicant possession.

What you seem to be saying above is:

1. Possession/actual occupation is required

2. Payment of rent is required.

Neither of the above apply to my situation.

JK0
23-02-2010, 13:26 PM
I expect it came down to economics. In the first flush of indignation people often consult a solicitor. The solicitor may have said: "You have a case. You are claiming £5000. If you instruct me my costs will be a couple of grand at least and may well exceed the amount you are claiming. Whilst you have a good case no litigation is certain. Do you want to send good money after bad? Tell you what, I'll get a letter off and we'll see what happens. If they don't pay up or make an offer I suggest you forget it or do it yourself through the small claims procedure."

The law of agency is as it is to maintain confidence in business transactions. Absent any shady dealing between the agent and the applicant, if a duly appointed letting agent allows someone into possession and accepts rent there is a tenancy binding on the landlord.

Yes but neither my father or the original poster accepted any rent.

betteroffer
23-02-2010, 13:29 PM
Yes but neither my father or the original poster accepted any rent.

Possession or actual occupation could be the requisite consideration needed to bind the contract.

JK0
23-02-2010, 13:35 PM
Yes I know. Tenants rights are so much in their favour that it is now impossible to even show any kindness.

Last month a friend of a friend agreed to rent a flat from me. A few days before move in date, he asked if he could measure up for some furniture.

Thinking back to what happened to my father, I told him that he would only have access once tenancy had started.

Sad, eh?

jeffrey
23-02-2010, 14:30 PM
Yes I know. Tenants rights are so much in their favour that it is now impossible to even show any kindness.

Last month a friend of a friend agreed to rent a flat from me. A few days before move in date, he asked if he could measure up for some furniture.

Thinking back to what happened to my father, I told him that he would only have access once tenancy had started.

Sad, eh?
It's not really any different from V of property whose P wants access before completion. If in doubt, don't!

Lawcruncher
23-02-2010, 15:01 PM
My research on this point is showing that this principle does not apply to a tenancy at a future date, therefore only applies when in actual occupation.

and


That seems to confirm my point and does somewhat contradict your earlier arguments. The agent nor I have not given the first applicant possession.

What you seem to be saying above is:

1. Possession/actual occupation is required

2. Payment of rent is required.

Neither of the above apply to my situation.

There is a distinction between:

(a) the creation of a tenancy; and,

(b) an agreement to create a tenancy.

Leaving aside detail not relevant to this discussion, a tenancy can be created in one of two ways:

i) by deed

ii) by the tenant taking possession and so long as the agreed term is not longer than 3 years

(See sections 52 - 54 of the Law of Property Act 1925).

Quite distinct from the above:

iii) An agreement for a tenancy where the term exceeds 3 years must be in writing

iv) An agreement for a tenancy where the term does not exceed 3 years does not need to be in writing

(See Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.)

The combined effect of the above is (amongst other things) that:

v) an oral agreement for a tenancy for 3 years or less is binding, but that the tenancy does not start until the tenant takes up occupation.

Lawcruncher
23-02-2010, 15:09 PM
Yes but neither my father or the original poster accepted any rent.

The acceptance of rent is not crucial.

A binding agreement (whether oral or written) does not depend on the consideration being actually paid, but being payable.

jeffrey
23-02-2010, 15:12 PM
There is a distinction between:

(a) the creation of a tenancy; and,

(b) an agreement to create a tenancy.

Leaving aside detail not relevant to this discussion, a tenancy can be created in one of two ways:

i) by deed

ii) by the tenant taking possession and so long as the agreed term is not longer than 3 years

(See sections 52 - 54 of the Law of Property Act 1925).

Quite distinct from the above:

iii) An agreement for a tenancy where the term exceeds 3 years must be in writing**

iv) An agreement for a tenancy where the term does not exceed 3 years does not need to be in writing

(See Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.)

The combined effect of the above is (amongst other things) that:

v) an oral agreement for a tenancy for 3 years or less is binding, but that the tenancy does not start until the tenant takes up occupation.
True.
**- plus, if it's for more than seven years, it must:
a. not only be by Deed; but also
b. be registered (as a new lease) at HMLR.

Lawcruncher
23-02-2010, 15:29 PM
Tenants rights are so much in their favour that it is now impossible to even show any kindness.

This thread is not about tenant's rights, but about whether or not there was a contract.

Let me pose a question:

Does anyone think that a man of probity should, even if the law allows him to, withdraw from a deal he has concluded solely on the grounds that he can do a better deal elsewhere and where he had not warned the other party he may do so?

Would your answer be different if the deal had been negotiated by an agent who had exceeded his authority and the other party did not know, or could not reasonably be expected to have known, that he had exceeded his authority?

JK0
23-02-2010, 15:34 PM
This thread is not about tenant's rights, but about whether or not there was a contract.

Let me pose a question:

Does anyone think that a man of probity should, even if the law allows him to, withdraw from a deal he has concluded solely on the grounds that he can do a better deal elsewhere and where he had not warned the other party he may do so?

Would your answer be different if the deal had been negotiated by an agent who had exceeded his authority and the other party did not know, or could not reasonably be expected to have known, that he had exceeded his authority?

In the case of the o/p, he hadn't concluded the deal had he?

In the case of my father, if that is what you are still banging on about, the other party could reasonably be expected to know that the agent had exceeded his authority.

Lawcruncher
23-02-2010, 15:53 PM
In the case of the o/p, he hadn't concluded the deal had he?

In the case of my father, if that is what you are still banging on about, the other party could reasonably be expected to know that the agent had exceeded his authority.

I was asking generally.

In neither case do I know the full facts or what the agent actually agreed. I am just trying to get across the very basic legal point that principals are bound by their agent's acts. Qui facit per alium, facit per se (he who acts through another acts through himself) is a centuries old principle.

mind the gap
23-02-2010, 18:04 PM
Yes I know. Tenants rights are so much in their favour that it is now impossible to even show any kindness.

Last month a friend of a friend agreed to rent a flat from me. A few days before move in date, he asked if he could measure up for some furniture.

Thinking back to what happened to my father, I told him that he would only have access once tenancy had started.

Sad, eh?

I think you have answered your own question.

betteroffer
23-02-2010, 20:22 PM
...In neither case do I know the full facts or what the agent actually agreed.

I have said numerous times what the agent has stated to the applicant over the phone that I am happy to proceed with the application. That's it. Nothing less nothing more.

I do not think "I am happy to proceed with the application" can be construed as an agreement to create a tenancy as you point out, as I am still treating the entire process as an application and I am presuming here that the agent had told the applicant the very same words.

Rightly so the deal was not concluded because further and additional terms were due to be provided by the way of a draft AST agreement.


Does anyone think that a man of probity should, even if the law allows him to, withdraw from a deal he has concluded solely on the grounds that he can do a better deal elsewhere and where he had not warned the other party he may do so?

With reference to your quote above, the agent had informed the applicant that I was considering another offer. I later then confirmed I have decided to accept the second applicant.

Lawcruncher
23-02-2010, 21:03 PM
I have said numerous times what the agent has stated to the applicant over the phone that I am happy to proceed with the application. That's it. Nothing less nothing more.

I do not think "I am happy to proceed with the application" can be construed as an agreement to create a tenancy as you point out, as I am still treating the entire process as an application and I am presuming here that the agent had told the applicant the very same words.

Rightly so the deal was not concluded because further and additional terms were due to be provided by the way of a draft AST agreement.

The lady doth protest too much, methinks.

I am not trying to prove you are wrong or denying the truth of what you say. I am only concerned with stating the law. I will not be drawn into saying anything that can be taken as justifying your actions since these are entirely a matter for you.