Two agents chasing commission for same tenant

[BEN77]

Hi there, I'm new to this so any help would be greatly appreciated!

I have recently placed a property to let with a LA and signed their terms. A tenant introduced by them came, saw the property and left. A week or so later I was contacted by a second LA who offered me a lower commission than the first agent so I proceeded to sign terms with them as well.

This second agent returned a couple of days later with the same tenant who was introduced by the first agent and this time the tenant was happy to proceed with this second agent rather than the first. He has signed the Tenancy agreement, paid his deposit and moved in.

Now I am getting chased by the first agent (no idea how they found out) for their commission for their part of introducing this tenant to me. Do they have a right to this commission? I would have thought that it is the tenants choice as to who they proceed with...

[oaktree]

Did you read either of the terms of business before signing them? does the first set of terms cover the situation you are in i.e. LA claiming commission from you for subsequently letting the property, via a third party, to a tenant introduced by them?

[Paul_f]

Hi there, I'm new to this so any help would be greatly appreciated!

I have recently placed a property to let with a LA and signed their terms. A tenant introduced by them came, saw the property and left. A week or so later I was contacted by a second LA who offered me a lower commission than the first agent so I proceeded to sign terms with them as well.

This second agent returned a couple of days later with the same tenant who was introduced by the first agent and this time the tenant was happy to proceed with this second agent rather than the first. He has signed the Tenancy agreement, paid his deposit and moved in.

Now I am getting chased by the first agent (no idea how they found out) for their commission for their part of introducing this tenant to me. Do they have a right to this commission? I would have thought that it is the tenants choice as to who they proceed with...A tenant doesn't have any say in a contract between you and any agent. Agent No 1 introduced the tenant and as far as I can see they would be the ones entitled to commission, but did they enter into negotiations to let with the (then) applicant?. However as you then signed a second agent's TOB and they were probably charging the applicant tenant lower charges for referencing etc then it's fairly obvious agent No 2 would be the preferred option from the applicant's point of view. It's up to agent No 1 to state his case and if he tries to recover his fee through the courts upon your failure to pay up, then you would have to defend it. The court would decide the merits of the contract between you. That's the danger of signing contracts with more than one agent; you leave yourself open.

The other option that might be open to you is if the agent is a member of a redress scheme such as the Ombudsman for Property Services as I think he is now known.

[BEN77]

Thanks for your replies.

It does seem i skimmed over the agreements with the agents since both terms state that they are due their introduction fees for any tenant who is introduced to my property who subsequently takes up the tenancy.

However, LA 1 had done no work with the tenant apart from bringing him through my door, without so much as a follow up phonecall afterwards to give me feedback. Clearly, according to their terms they should be due a fee, but can these terms be questioned as unfair? Surely this must be a regular occurrence out there for any landlord who places their property to let with multiple agents... Would it be worth their while taking me to court? Again, many thanks for any valuable insight you could be provide me! :)

[Springfields]

Locally we don't really get this too much as the agents tend to have more relaxed terms of business and its usual for a LL to use several different agents.

Did you sign 'sole' agencies with them or were they aware of each other.

[dominic]

Only one of the agents introduced the tenant to you (that probably being A1). A2 did not introduce that tenant to you because you had already been introduced.

However, I suspect you have already paid A2 his commission.

That said, what does the wording of A1's TOB say? This will be all important.

[BEN77]

The wording of LA1 states:

"I hereby warrant that I/we shall pay an introduction fee to (LA1's company name) upon accepting a tenancy or signing contracts with any tenant introduced to my/our property by (LA1's company name), as from signing this agreement"

There was no mention of sole/multiple agency options in either of the two contracts.

It seems unjust that if LA2 has done most of the work, apart from not being the first to introduce this tenant, LA1 should get paid for doing virtually nothing. If this stands true then I could set up a lettings agency, email out all the properties I've listed to those who had registered on my website, and then follow up with the tenants to see if they had taken up any tenancies with any of the properties that I had emailed to them. If they had, I could argue the same case and claim commissions for "introducing" the tenant. Lets hope I don't give anyone any ideas...

Surely there must be a line drawn somewhere or is it for the courts to decide how much work is enough for the agent to claim their introduction fees? :mad:

[dominic]

Unfortunately I don't think you have much wiggle room on this one.

As a matter of fact, A1 introduced T to you.

As a matter of fact, you and that T entered into a tenancy agreement for your property.

Therefore, according to the terms of the agency agreement, A1's fees are due.

Remember, commission is not calculated by reference to actual work done, but by reference to a particular outcome.

Ican agree with you to sell my £30,000 valued car to you for £1,000. That may be "unjust" but we nevertheless would have an enforceable agreement.

Much as it pains me to come down on the side of the agents.

However, depending on the wording of the terms of your agency agreement with A2, you may be abel to show that his commission was not due. But I think that would be an uphill struggle.

As a matter of strategy, you may be able to convince A1 to drop his claim, or agree a lower amount by way of settlement.

[Poppy35]

As a LA I would persue you if I was LA1 and to be honest its very annoying when landlords dont read their terms and conditions and just sign the papers and then get funny when they have to pay both sets of fees.

Personally (and this is my moral view speaking not professional head) I would offer LA1 a sum of money as a gesture of goodwill and perhaps say you will use them again once the current tenancy ends.

To be honest they could take you to court but again it all depends on wording of contracts. Its not like you were not happy with them as the other agent approached you - touting for business is this way does not me think well of the other agent.

Hope you get things sorted out.

[BEN77]

Thanks for all your replies. I really appreciate it.

I'll contact the first agent and see if the situation can be resolved by means of a lower payment to them.

Just out of interest, for future reference, if LA2 had introduced a different tenant and I had taken this second tenant up instead of the first one, what would my obligation generally be to LA1? In their terms it simply states that should I pull out once satisfactory references have been received that I agree to pay back the cost of obtaining these references. Since, for example in this case no references had been obtained would I be right in saying that no costs would be due to them, since nothing else is mentioned in the contract?

Just curious to see how some of you LAs out there deal with such situations since in neither of these contracts with the agents are sole/multiple agencies mentioned. Thanks!

[Paul_f]

Just out of interest, for future reference, if LA2 had introduced a different tenant and I had taken this second tenant up instead of the first one, what would my obligation generally be to LA1? None whatsoever. In their terms it simply states that should I pull out once satisfactory references have been received that I agree to pay back the cost of obtaining these references. Since, for example in this case no references had been obtained would I be right in saying that no costs would be due to them, since nothing else is mentioned in the contract?Probably not, but the lesson is to make sure that any TOB you have with an agent reflects your expectations, and to have clauses that you don't agree with altered if you can!

[Lawcruncher]

Whilst always prepared to give even letting agents the benefit of the doubt, I cannot help feeling that there were some dodgy dealings here. It seems a strange coincidence that an agent approached you out of the blue and produces a tenant who had expressed an interest with Agent 1. If it can be shown that Agent 2 acted unprofessionally I cannot see how he can be entitled to any commission.

[rajeshk4u]

This seems similar to the Foxtons case, where a buyer decided to purchase a property through a second estate agency. So the seller was being chased for the commission from two different estate agencies.

The court ruled "commission will only be payable if the purchaser is introduced by that agent to the purchase and not simply to the property. "

I guess, it could apply to this case. So LA2 would be entitled to the commission.

Did LA2 took your tenants are found a second time?

[leaseholdanswers]

I would find it hard to beleive teh T did not tell A" that they had already seen it. On the basis of "effective introduction" pushing forward the applicant would put them on a stronger footing.

Why could T not proceed with A1, should it be taken off the market, did the tenant not make an offer to A1. These issues are examined as well as the contract in place.

Normally both agents agree to a split.

[Springfields]

A tenant will register with many agents when looking for a property, chances are if they are both local LA2 has contacted the tenant once they have the instruction, or TT has contacted the agent to make comparison on fees. It would also seem that OP was keen to progress with LA2 as they were offering a better fee structure than LA1.

If OP cannot resolve this issue with LA1, then I suggest he has a chat to LA2 or tenant to find out the exact circumstances of the arrangement. If its a case of undercutting on fees and they were fully aware of LA1's policies in regards to their terms of business/LL had told them LA1 was acting on behalf (as lets face it all letting agents have a shop around to see what the competitions doing) I would be complaining to them and instructing them to divert the tenant to LA1.

[dominic]

Whilst always prepared to give even letting agents the benefit of the doubt, I cannot help feeling that there were some dodgy dealings here. It seems a strange coincidence that an agent approached you out of the blue and produces a tenant who had expressed an interest with Agent 1. If it can be shown that Agent 2 acted unprofessionally I cannot see how he can be entitled to any commission.

Well, that may be so, but I think we are now imputing facts which we have not been told exist.

[leaseholdanswers]

I am not sure its unprofessional in the legal sense. Recent decisions for a number of reasons good and bad in essense put the commission in the hands of the person who does the work. Historically those that make the introduction have always received a commission with a lower burden on them.

This reflects the change in how we find homes, the way in which we are introduced to properties, the extent of choice, and agents are now less likely to defer to a competitor as thei relationships with them are that much more short term and limited.

For the vendor lessor check your TOB and think through if you appoint multi agents that this is a risk that you have to defend from two claims of introduction.