Here is a question to the blog clinic from Sandra (not her real name) who is a landlord:
Wondering if anyone can help!
Our previous tenants from 2018 submitted a Rent Repayment Order claim for a non licenced HMO. Initial Rent Repayment Order Letter correspondence from previous tenants solicitor was received February 2020.
We then made a financial offer Pre Coronavirus Pandemic, our offer was submitted to the tenants via their solicitor beginning March 2020. In the offer letter we stated that due to our already fragile financial situation, a third party would be supporting/loaning us the funds to pay the RRO.
The previous tenants then accepted our offer in April 2020.
We have since sent a further reply since they accepted advising due to the current pandemic we now have found ourselves in further fragile financial status. Also advising the initial third party support/loan is no longer available due to their now fragile financial situation. We have proposed a lower settlement figure (which the third party can support us with) to which the solicitor has advised once an offer is made and accepted, it becomes legally binding.
And have advised that they will issue court proceedings to enforce the terms agreed upon. And we will also be held liable for previous tenants court costs.
My question is: Where do we stand? And what would you do?
We feel no consideration is being given to the current situation so many of us find ourselves in. We just want this nightmare dealing with as a matter of urgency and want to prevent court proceedings at all costs!
Answer
I am afraid the solicitor is right. When you negotiate a settlement and agree on terms, those terms are then binding on you and the other party are perfectly entitled to go to court to enforce them.
This is why you need to be careful, when you make an offer, that it is something you can afford.
I realise that the coronavirus pandemic has changed many people’s financial situations – but it has not changed the law. Also although coronavirus itself is new, the problem of people’s financial situation changing for the worse after a settlement has been concluded is not.
Once a contract has been made (and an agreement for settlement is a contract) it can only be changed with the consent of both parties. One party’s changed financial situation is not a reason in law, to alter a contract against the other parties wishes.
Your opponents’ attitude may be unfair in the circumstances but they are within their rights. Life is not always very fair.
However, you need to make it clear to them that although you will honour the agreed settlement figure – as you do not actually hold funds to pay this right now, they will have to accept new payment terms and give you longer to pay.
Point out that even if they take you to court, they can’t force you to pay money which you do not have. The court enforcement procedures cannot create funds where none exist.
So your discussions with them should be about how you pay the agreed sum not changing the amount that you will pay them.