This is day 9 of my 31 days of tips on tenancy agreements series. To see the rest of the series click here.
Letting agents
Many tenants, perhaps the majority of tenants, are signed up by letting agents, who deal with the drafting of the tenancy agreement and signatures on behalf of the landlord, their client. Indeed often the landlord is not aware that his property has been let until after the event.
The law of agency is not well known and it is not always realised that dealing with an agent is, legally, the same as dealing with his principal – the landlord. The agent is, as it were, the spokesperson or an extension of the landlord. There are a number of things which follow on from this:
- If the agent agrees to something, the landlord is bound by it – he is not entitled to say to the tenant “I am not going to do this because I did not agree to it”. Its not the tenants’ fault if the agent and landlord’s lines of communication get mixed.
- If a payment is made to the agent, it is the same (legally) as if it was paid to the landlord. So if the agent ‘does a runner’ taking all the landlords rent with him, the landlord cannot make the tenant pay again. He should have been more careful who he chose as agent
- However the agent is not entitled to withhold money/rent or paperwork from the landlord. For example see this blog post where I have written about whether agents have the right to withhold references taken about tenants.
- The relationship between the landlord and agent is what is known as a ‘fiduciary relationship’. The agent, because he is in a position of trust, has a duty to behave honorably and not take advantage of this. I discuss this in my blog post here
Agents and tenancy agreements
Many agents sign the tenancy agreement on behalf of their clients. Strictly speaking it should be the landlord who signs. However I have never known any one take issue with the fact that the agent has signed (insofar as the validity of the tenancy is concerned).
I would suggest though that agents should, if possible, get their landlords to sign the tenancy, if only so they cannot be accused later of making a mistake.
Anything agreed by the agent in connection with the tenancy – the rent, whether the tenant can keep a pet, whether the tenant can re-decorate in a different colour etc, will be binding on the landlord. So he needs to make sure that the agent is aware of his wishes and carries them out.
As discussed on Day 6, the agent should not put his own name on the tenancy agreement as landlord. Not because this might this cause the landlord problems if he has to take over the management of the property (although it might), but for the agents protection.
Agents liability
Generally an agent is not liable personally to a third party where he has been acting as agent. However if he is acting as agent for an ‘undisclosed principal’ (i.e. if he puts his own name on the tenancy agreement and signs it without telling the tenant he is an agent), then he *will* be liable. Of course if he gets sued by the tenant he can join the landlord in to the proceedings, but this will not help him if the landlord is insolvent.
It should perhaps be repeated here that although many agents are honorable and competent, and do a superb job for their clients, at present letting agents are unregulated. So any Tom Dick or Harry can set up, with no qualifications whatsoever. The government has promised to rectify this, but in the meantime both landlords and tenants should be careful which agents they choose.
Do you have any comments on this section? Have you experienced problems with an agent signing the tenancy agreement as landlord? Were you aware that an agent had a fiduciary duty to his principal (landlord)? Do you agree that agents should be regulated?
Tomorrow I will be talking about describing the property in the tenancy agreement.
NB Read about my tenancy agreements service here.
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