I am a tenant and want to leave my current address by exercising a break clause, if I may, but I am unclear when I am supposed to exercise. The tenancy agreement is an Assured Shorthold Tenancy Agreement, fixed term 12 months…

“term shall be from and including 15th August 2011 to and including 14th August 2012 and then monthly periodic but may be ended earlier by either party giving notice under clauses 31.1 and 31.2“.

First issue is that there is no 31.1 and 31.2, or indeed any 31.x- the last clauses in the contract are infact 30.1 and 30.2 under the heading “Break Clause”. It seems obvious to me that this was an error and it was supposed to refer to 30.1 and 30.2 not 31.1 and 31.2 since without any 31.x clauses the prior statement was meaningless.

Anyway, here is 30.2 which relates to when tenant can supposedly give Break Clause Notice (if valid):-

“The Tenant may give the Landlord at least 1 months’ written notice not to take effect until after the end of the fifth month of the Tenancy and not to expire any earlier than the end of the first six months of the Tenancy or thereafter, of his intention to leave the property by serving notice upon the Landlord in accordance with clause 29.1. Such notice must also expire at the end of the relevant period, being the day before rent normally falls due, which is the 14th of the month. Upon the expiry of this notice this Agreement shall cease except the Landlord or the Tenant can pursue their legal remedies against each other for any breach of any pre-existing rights under the Agreement apart from the pre-exisiting right to a fixed term contract which is subject to the break clause“.

Since the fifth month ended on Jan-14, my understanding is that I would not have been able to give notice until Jan-15 at the earliest. And the notice would have to expire at least one month later, which could be Feb-14 or Mar-14 or indeed the 14th of any month?

Since we have passed the Jan-15th date, am I still able to give notice at any time until the fixed term ends provided that the notice expiry ends on the 14th of a month, since now in late January the next one being Mar-14?

Or this break clause a “one shot” break and I have missed the opportunity to give notice? I am really confused by the wording, especially the use of the word “thereafter” in the first sentence of 30.2!

Thank you in advance for any help!

Hmm.  Thats a bit of a dogs dinner of a clause and no mistake.  I suspect it could fall foul of the Unfair Terms in Consumer Contracts Regulations 1999 save that it would be unfair on you.  So if there was any kind of dispute about its interpretation, the Judge should chose the interpretation most favourable to you.

However from my reading of it, it sounds as if so long as your notice neither takes effect nor expires before the fifth or alternatively the sixth month, you should be OK.  Make sure you give not less than one months notice expiring on the next 14th day of the month.

Although you could add a sort of ‘saving wording’ in your letter.  Saying something along the lines of  ’If this date does not comply with the break clause at clause 30.2 of my tenancy agreement, then the earliest date which will satisfy the requirements of this clause.’

It might be an idea to request the agents to respond with in 7 days confirming the date that you have provided is correct, and explain that you find the clause difficult to understand.  If the agents have been difficult in the past, serve it by hand and take an independent witness with you.

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Online systems are convenient,  as tenants will not have to visit your office.   They could also save time.  But are they possible?

There was quite a lot of interest in my earlier post signature of documents in an electronic age.  Here we look at taking things a bit further.

I have been involved in setting up two online systems. Neither are perfect, but so far as I am aware, they have worked.

The legal problem and the law

The problem is that a tenancy created at any time other than at the time the tenant goes in (ie by the tenant signing the tenancy agreement at the time they are given the keys) must be by deed.

This is set out in the 1925 Law of Property Act (s52), which says that all conveyances of land must be by deed. A tenancy agreement is a form of conveyance as it is transferring a legal interest in land / property.

However this rule is relaxed in s54 for leases of under 3 years at a market rent which take effect immediately. So under s54, if you go into a property and start living there and paying rent, that creates a proper valid tenancy. Even though there may be no tenancy deed, or just a tenancy document which is not a deed.

The first solution – total remote dealing

This was a system I helped set up a couple of years ago for a company which provides student accommodation. Its a while ago now so I can’t remember the exact details. I know it took ages to work it all out.

As the students never see the properties before signing up (many of them are coming from overseas), the contract is subject to the distance selling regulations and we had to incorporate all the notices regarding that in our procedure.

The students had to navigate through an online procedure, make payments online, and then accept and agree to the tenancy contract by ticking a box and pressing ‘enter’ (or something similar).  The system included taking a guarantee.

I explained to the clients that although a contract could be created online, this could not create an actual tenancy agreement as this needed to be created by deed if the agreement was made in advance.

However a tenancy would be created anyway when the students went into possession under LPA25 s54 and so far as I could see, this would be governed by the terms of the contract they had already accepted (which would probably take effect in equity).

As a tenancy is this weird mixture of land law and contract law, I don’t see why the tenants should not be bound by the terms of the contract even though this was not set out in any actual tenancy deed.

My advice to them was that they should get the students to sign a proper tenancy agreement at the time they picked up the keys, but apparently this is not practicable.

The second solution – the multiple counterpart deed

Here a landlord / letting agent wanted tenants to be able to download and sign tenancy agreements, without having to do this in the agents office.

In all cases (I was assured) the prospective tenant (or at least one of joint tenants) would have been shown round the property and so the distance selling regulations would not apply here.

The system we worked out was that the tenants would be given a special login to a place where they could download the tenancy agreement (which would be created by information given by them online). They would all need to sign their own copy of this, as a deed (ie by getting their signature witnessed), and then send that off to the agent.

The tenancy agreement contains a counterparts clause which provides that the tenancy agreement can comprise a number of different counterparts which taken together will form the agreement.

Once the signature pages have come in from all the tenants, these are then checked and collated. Once they are all present, the whole agreement is scanned and a pdf sent out to all parties.

Conclusion

These are two solutions. There are probably others. If you have any other ideas please do share them.

To the nay sayers, I would say that online procedures is what people want. They are going to start doing this whatever the lawyers say about it. So I think that we should try to work creatively and find a solution which fits in (more or less) with the law we have. Rather than wag out heads and say “no, no, no” which is just going to irritate people.

But it would be nice if this situation could be addressed at some time by our law makers and if the current system, created nearly 100 years ago, could be brought up to date.

Things to watch out for with company lets

Firstly, lets to companies are not assured shorthold tenancies (ASTs).
The reason for this is that the act which set up the protective code which governs ASTs, the Housing Act 1988, specifically states that its provisions apply only to ‘individuals’ i.e. not to artificial beings such as companies.

Companies are businesses (so the argument goes) and do not need the protection that the act gives.

What this means is that ‘company lets’ (as they are called) are governed by the underlying ‘common law‘, the legal rules which regulated tenancies before the Rent Act and Housing Acts came along to change them.

The main practical effect of this is that:

• you should not use the standard AST agreements found in shops and on the internet, but a tenancy agreement designed for company lets (we provide one at Landlord Law)
• You don’t use section 8 or 21 possession notices. The correct form of notice is an old style Notice to Quit
• The procedure and paperwork for evicting tenants is different

Then you need to consider why these people want to rent via a company let.
There are a number of reasons. For example:

• It may be tax related.
• It may be so that they can provide accommodation for a number of staff and directors on a short term basis.
• Or it could be to provide accommodation for an employee or director who would not pass normal referencing.

You should therefore be careful with company lets. Although they can be lucrative, bear in mind that you do not really have any control over who the company places in the property once let (technically you can take steps to repossess for breach of contract but practically this is difficult to do during the fixed term, for anything other than rent arrears).

You therefore need to take steps to protect your position, before the property is let.

I would suggest :

• Doing a search against the company at Companies House. If your property is an expensive one, consider buying a more detailed report and (in particular) checking the last few years’ accounts
• Taking a guarantee from at least one director, preferably two
• Checking carefully the references of the guarantors and getting credit checks done
• Asking for details of the person(s) who will be living in the property and checking them also
• Either letting for no longer than six months at a time, or ensuring that (for longer lets, eg a year) the tenancy agreement has a break clause.

You should also take a tenant/damage deposit. The good news here is that as this is not an AST you do not need to protect it in a tenancy deposit scheme, as the tenancy deposit regulations only apply to ASTs.

If you are careful, as with all tenants, you should, hopefully, have a good letting experience.

Hi, I am trying to find out if a contract can be signed without my presence and sent to me. My tenant is currently living in another city and is hoping not to have to come down until her moving in date.

Can I send her the contract for her to sign and send back to me? Who will she need to have as a witness in order for it to be legal?

There is no legal requirement for the landlord to be present with the tenant when they sign the tenancy agreement. It is quite common for tenancy agreements to be sent out to tenants, either by post or by email, for them to sign and send back before the start of the tenancy.

It is best for the tenant to sign the tenancy ‘as a deed’ which means having wording to this effect on the tenancy itself and the tenant signing before independent witnesses who then give their name and address under the signature.

The witness can be anyone who is not a party to the agreement (ie you, the landlord, would not have been an appropriate person) but it is best to have someone who is independent (ie not a close relative).

Note that if the prospective tenant has never seen the property, the Distance Selling Regulations may apply.