Appeal Court judges have found in favour of the landlord in the landmark case of Northwood Solihull v Fearn & Ors, preventing a potentially huge logistical headache for landlords and letting agents.
The judges ruled that any authorised employee of a landlord or letting agent can sign a section 8 notice (and by extension a section 21 notice) or a tenancy deposit certificate, and that these documents can also be signed in accordance with section 44 of the Companies Act.
They also said that non-compliance would not necessarily invalidate the document.
The important case surfaced when the Solihull branch of letting and estate agency Northwood tried to evict a couple who had stopped paying their rent in 2019, and served a Section 8 eviction notice.
Tenants Mr Fearn and Ms Cooke argued during an initial County Court hearing that under section 44 of the Companies Act 2006 their eviction notice had not been signed by two authorised signatories or by a company director in the presence of a witness, and that the section 44 requirements also applied to the confirmatory certificate for their original deposit.
High Court judges then ruled that this law did not apply to eviction notices, but they did uphold the couple’s claim that it applied to a confirmatory certificate for a rental deposit.
There were concerns that had the tenants won the appeal, it could have prompted a raft of claims against agents.
Property lawyer David Smith of JMW, who acted for the landlord, says: “The tenant’s proposed position, if right, would have been very troubling to landlords and agents as it would mean that every possession notice and certificate would have to be signed by at least one director and a witness.
“Inevitably, this would cause huge practical and logistical challenges to companies who operate multiple office locations, and the issues are even more obvious when one thinks of bigger agents and landlords with national operations who need to authenticate hundreds of these documents every day.”
But following the appeal hearing last week, the tenants have lost on both elements.
Smith (pictured) adds: “The court found that the certificate could be signed by a person acting on behalf of the landlord.
“The section 8 notice was also capable of being served and signed by an agent on behalf of the landlord. This case continues the clear line from the Court of Appeal that technical defences to section 8 and 21 notices are not likely to work.”
Paul Shamplina of Landlord Action says: “We have been advising clients to ensure Notices are signed in accordance with the Companies Act provisions but following this welcome judgment we now have authority that a belt and braces approach is no longer necessary.
“So it’s good that clarity has finally been delivered by the courts and well done to David Smith and his team.”
Tim Frome, Legal Associate Director at Hamilton Fraser, parent company of Mydeposits, says: “This decision will come as a relief to millions of landlords and their letting agents and I am pleased that the Lord Justices have taken a common-sense approach to the signing of deposit protection prescribed information and possession notices.
“Having written the mydeposits scheme rules back in 2006 and studied the legislation in great detail it was never the intention of parliament for the deposit protection legislation to create technical reasons to penalise landlords.
“It is a practical impossibility for larger corporate landlords or agents to comply with Companies Act signing requirements on prescribed information.
“Having an authorised person doing it on their behalf means that deposit protection can be administered simply and quickly meaning that tenants can then benefit from the knowledge their deposit is protected and using the scheme’s alternative dispute resolution service if required at the end of the tenancy.
“Mydeposits has now dealt with over 100,000 tenancy deposit disputes since being set up meaning tenants get their money back when they are entitled to it and keeping those disputes out of the courts.”