The role of Letting agents
Many tenants, perhaps the majority of tenants, are signed up by letting agents, who deal with preparing 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”. It’s 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 honourably and not take advantage of this. I discuss this in my blog post here
Letting agents and the tenancy agreement
Many agents sign the tenancy agreement on behalf of their clients. Strictly speaking, unless the agent holds power of attorney, it should be the landlord who signs. However, I have never known anyone take issue with agents signing (insofar as the validity of the tenancy is concerned).
The advantage of getting the landlord to sign the tenancy agreement (from the agent’s point of view) is that they can’t be accused later of having made a mistake – because the landlord should have spotted this when they signed.
If the agent does sign, it should be clear that he (or she) is the tenancy agreement signing as agent – so you should put something like ‘as agent’ or even just ‘agent’ next to the signature.
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 landlords need to make sure that their agent is aware of their wishes and carries them out.
As discussed on Day 7, the agent should not put his own name on the tenancy agreement as landlord. Not because this may this cause the landlord problems if he has to take over the management of the property (although it may), but for the agent’s protection.
Letting agents’ liability
Generally, under agency law, a letting 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 into the proceedings as a ‘third party’ so he can pass on the liability, but this will not help him if the landlord is insolvent.
It should perhaps be repeated here that although many agents are honourable and competent, and do a superb job for their clients, at present the letting agent industry is largely unregulated. So any Tom Dick or Harry can set up, with no qualifications whatsoever.
Things are getting better, and at least now letting agents have to join a redress scheme. There are also rules about letting agents fees and letting agents are also bound by the various consumer laws. However this does not prevent the rogues and the incompetents from setting up shop, so both landlords and tenants should be careful which agents they choose.
Next time I will be talking about describing the property in the tenancy agreement.
NB Find out more about my Tenancy Agreement Service on Landlord Law
All Landlord Law tenancy agreements allow for agents managing the property (if their details are provided) and include special clauses which protect both the agent and the landlord.