Letting and Managing Agent Development

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Letting and Managing Agent Development Course

This development course is mandatory for all letting and managing agents to complete in addition to the landlord development course in order to complete the training.

6. General Law

This section will consider the general law of agency including:

• contracts

• terms of business

• general principles

• drafting / sourcing terms of business

• fees and charges

• variation

• termination

• employment

• contracts with contractors

   

  6.1 Contracts

  One of the main principles of the law of contract is that there must be an offer, acceptance, consideration and some intention to enter into a binding relationship. It is possible for an agent to enter into a legally binding contract with a landlord, tenant or other third party with nothing in writing. In other words a verbal contract. In the case of an agency agreement it is the agent who makes the offer and the landlord who accepts. The risks around verbal contracts are obvious; therefore in any pre contract discussions it is important for the agent to stress that contracts commence only when an agreement is signed and completed. The same would apply around the offer of a tenancy or even an agreement to ‘hold’ a property for a prospective tenant.

  The contracts used and entered into by agents on a regular basis are:

• Terms of business

• Tenancy agreements

• Employment contracts

• Contracts with third parties such as sub-contractors

   

  6.2 Terms of Business

  Following initial discussions with a prospective landlord, the agent sets out the terms, in writing; the principal (more commonly called the landlord in the letting situation) accepts, they both sign and the contract comes into existence. It is of paramount importance that the agent does nothing which may constitute a commencement of his service until the landlord has signed the agreement and given authorisation to proceed.

  Unfortunately the ‘law of agency’ is not one set of statutory regulations. The ‘law’ has developed over many centuries as common law, statute, case law and so on. This whole subject is full of difficulty and ‘grey’ areas. This means that any person who holds himself out as an agent for a principal would be taking huge risks if the terms of that agency are not clearly understood and legally compliant. Any agent who acts beyond that authority is running significant risks.

  It follows therefore that an agent should aim to produce a ‘watertight’ agreement. The agreement must not only accurately reflect the terms agreed by the parties, but it must also be consistent with what is customary practice for the business concerned (The RICS code of practice for lettings and management is a good starting point). The agreement must also be ‘personal’ to the individual principal’s circumstances and instructions and it must be current. The problem in most busy agency offices is that a ‘standard’ agreement is produced and used in every case without thinking. The standard agreement may be out of date (staff may not be doing things that way anymore) or it may not cover some particular aspect of that client’s property or instructions.

  6.2.1 General Principles

  The moment a landlord says “go ahead”, in other words when an agent offers to carry out services for a landlord and the landlord either expressly or by implication says “okay”, the agreement is created. The agreement will continue until it is expressly cancelled by the parties or until the services have been concluded. This means that if the arrangement was for a tenant find, the agreement will end as soon as the tenancy has commenced. Where an agent is instructed to manage a property the agreement will run as long as the parties have agreed or until the end of the tenancy, unless cancelled earlier. Unless expressly stated, the agent has no authority to act thereafter nor is the agent liable for any events occurring after that date (unless they arise from some earlier act or omission by the agent).

  An agency agreement may be implied by the conduct of the parties and it may also be subsequently ratified after the performance of the event. Ratification is not always a straightforward matter, but it may be expressed or implied, i.e. the landlord accepting rent or taking no action to evict a tenant would be deemed to have ratified the arrangement.

  An agency agreement may also be created by the extension of an existing relationship. It is not unusual for an agent to be engaged during the pre-let refurbishment of a property; in which case the agency agreement can start long before finding a tenant has commenced.

  During the engagement/management period the landlord will be liable for all of the agent’s actions in the day to day management of the property. This could be rent collection, dealing with repairs and disputes. The extent of the agent’s authority will depend upon what the parties have agreed, express instructions given by the landlord, the law or authority implied by the conduct of the parties plus a duty of care.

  6.2.2 Drafting/sourcing Term of Business

  Agents who are members of a professional body may be required to use terms of business that comply with that organisation’s guidance. Templates are made available by them. Templates can also be purchased or drafted by a legal advisor.

  Agent’s Terms of Business are a critical legal document in a letting business. A well drafted agreement assists both parties; the scope of the service provided will be clear from the outset and disputes can usually be resolved by reference to the contractual position of the parties. It is not uncommon for an agent to obtain copies of competitors’ terms and use these as a base for drafting. Whilst this may be a good starting point there is no guarantee that other agreements are correct in law, or that those terms will accurately reflect the actual service to be provided.

  It is essential that any agreement is in plain English, is fair and accurately reflects the agency’s current practice or any particular matters agreed with an individual landlord. Variables such as fees are best shown as separate attachments.

  The Consumer Rights Act 2015 may apply. Essentially, this legislation is there to ensure the terms are fair and balanced. The legislation requires businesses to use terms which are not too technical, to make the interpretation simple. The contract should not seek to permit the agent to do or not do something which the law does not permit. Similarly, clauses which seek to waive the agent’s liability may not be regarded as fair. Declarations which say that the client has read and understood the contract are regarded as unenforceable, because if a client cannot understand a contract, stating that he does will add nothing to the contract. The legislation requires the agent to give the client adequate time to read and reflect before signing and accepting the services offered and in some cases a ‘cooling off’ period.

  Drafting the terms of business is an ongoing process. Agents should review the terms at least annually to ensure that the current day to day working practice is reflected in the terms.

  6.2.3 Fees and charges

  Agents usually base management fees as a percentage of the rent collected, plus separate costs for setting up, agreement fee, inventory fee etc. Clarity is needed as to whether the management fee is payable on ‘rents due’ or ‘rents collected’. The latter means that charges only apply if the tenant pays the rent, yet the agent will still be providing a management service throughout the period of non-payment. Also ensure it clarifies when the fees are payable. Some agents will collect the fee monthly from the rent collected and others will charge the whole fee for the agreed tenancy up front.

  An agent should always think about extra cost that can come along in day to day management. Who pays the cost for attending court or inspecting an empty property? Who pays for administration and time sourcing and arranging the delivery of a new appliance?

  Under the Consumer Rights Act 2015 agents’ fees for both their landlord and tenant clients must be displayed in a place likely to be seen in their office premises and on any website (if any). See Chapter 8 later for more details. The fees quoted must also be inclusive of VAT.

  The terms of business require clarity on matters such as minimum charges and what fees will be payable on the cancellation of the agreement. Is the fee for a sole agency and do charges apply if the landlord lets via another agency? The agent needs to protect his business against a landlord who withdraws early, but severely penalising such a landlord is not fair.

  6.2.4 Variation

  Once signed the parties cannot make changes (including fees) to the terms of business without consent. A provision to change the terms upon reasonable notice should be included, but that will give the landlord the opportunity to say no and withdraw instructions. Clearly it is not expedient to sign a new agreement every time fees are changed. This can be done by separate letter or notice, giving the landlord the opportunity to accept or decline (within a reasonable time limit). It is possible to build in a fee structure that enables increased fees by a set criteria. Where variations are agreed verbally or by practice, they should be recorded as a variation to the original terms and signed by all parties.

  6.2.5 Termination

  A landlord may revoke his agent’s authority at any time either verbally or in writing. Some agents seek to make termination difficult, but it is questionable whether penalty type clauses are enforceable. In view of the ‘close’ relationship between an agent and a principal it is better to end it sooner where the parties are not satisfied with the arrangements or working well together. If the client can prove that the service is unsatisfactory it is unlikely that a court would hold a landlord to the agreement.

  The agent should require a reasonable notice period and can make a minimum fee payable so as to avoid early termination. Many agents will have a minimum fee equivalent to cover six months’ management. This will reduce the risk of a landlord cancelling his instructions immediately the first tenant has taken possession.

  The agent should reserve the right to terminate the contract without notice where the landlord is unwilling to comply with statutory obligations.

  An agency agreement will terminate immediately upon the principal’s death. The principal’s estate is not bound by anything the agent does post death of the client even if the agent is not immediately aware of the death of the client. This will also apply if the property is sold as the landlord cannot manage the property, neither can the agent without instruction from the new owner.

  6.2.6 Agency by Estoppel

  Estoppel is a legal term, meaning that a person is precluded from denying the truth of a statement of fact previously asserted. This means that where one person has acted so as to lead another person to believe he has authorised a third party to act on his behalf, and that person, believing this, enters into a transaction within the scope of the authority, the first person is estopped from denying the agency. The fact that the agent may not have had express authority is immaterial. For instance, a tenant may be told by a landlord that he should ‘contact the agent’ regarding the defective heating. If the agent arranges a repair the landlord cannot claim that he is not bound by what the agent has done and he will be liable for the cost of the repair.

  Good employment practice is essential for any agency. It requires production of clear policies and rules and procedures for all staff. These policies include health and safety, helping employees understand their legal obligations and what their employer expects of them and how they should carry out certain activities. They also advise employees of the rules and rewards available to them.

  6.2.7 Cancellation Of Consumer Contracts

  Under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, in force from the 13 June 2014, agents taking on consumer landlords must follow new rules.

  Distance and off premises contracts have an automatic right to cancel within 14 days of agreeing the contract. Also, within that 14 day period, the agent is not allowed to do any work for the landlord without the landlords express consent. Clearly most landlords will not want the agent to wait 14 days before starting arranging EPC and advertising etc so express consent is likely to become the norm. If any work is done within the 14 days cancellation without following this process, then no charges are payable by the consumer.

  Firstly consumer landlord contracts will fall into one of three basic categories. Distance contracts (concluded without meeting), off premises contracts (basically those agreed from a home visit) and on premises contracts (those where the consumer comes to your premises and concludes the contract. For letting agents most contracts will probably be distance or off premises contracts. While it is accepted that some landlord will not be consumers, it may prove too tricky to identify the difference and therefore granting the same right to all may be a way of simplifying the business.

  In all three contract situations there is “prescribed information” (from the schedules at the back of the regulations) that has to be given to the consumer. There is a longer list for distance and off premises and, again, to simply things this longer list could be used for all consumers regardless of which type of contract they have. Failure to give this information could allow a consumer to cancel in anything up to twelve months and two weeks without having to pay anything!

  Additionally, for distance and off premises contracts it is a legal requirement to include information about the consumer’s right to cancel and a cancellation notice they can complete and return if they wish to exercise their right to cancel.

  The regulations also prohibit “additional charges” without the express consent of the consumer. This would obviously apply to making a charge not agreed at the point of creating the contract but could also be applied to increasing the amount charged. It is also not clear if a term in the contract allowing the agent to increase charges on a certain notice period would be consider to be express consent.

  The regulations also require consumers to be able to contact the trader on a basic rate phone number in order to seek assistance in their contractual relationship.

  Breach of these regulations carries unlimited fines.

  6.3 Employment contracts

  As any business starts to expand there comes a point where it is necessary to take on extra staff. Permanent employees will work on a full-time or part-time basis and must by law have a written statement of their main terms of employment. The following responsibilities apply in all cases:

• the workplace must be safe and secure, this may include travel to and from properties and while in attendance at the properties, that will be the workplace

• employers’ liability insurance must be in place

• employers must register with HM Revenue & Customs to administer a payroll system

• employees are entitled to paid holidays, the minimum wage and a maximum working week

• staff are entitled to statutory sick pay after being absent for three days

• staff are entitled to maternity and paternity leave

• employers must consider requests for more flexible working practices for parents

• employers must avoid discriminatory behaviour (including age discrimination)

   

  6.3.2 Key points around employment

  A contract of employment is the basis of the employment relationship. Most employment contracts do not need to be in writing to be legally binding, but it is better if they are. A contract ‘starts’ as soon as an offer of employment is accepted. Starting work is evidence that the employee has accepted the terms and conditions offered by the employer.

  Staff in a letting agency are legally entitled to a Written Statement of the main terms and conditions of employment within two calendar months of starting work. This should include details of things like pay, holidays and working hours. Most terms of an existing contract of employment can be varied only with the agreement of both parties.

  Some people might assume that a contract of employment consists of only those things that are set out in writing between an employer and an employee. It is true that many of the main issues, such as pay and holidays, are usually agreed in writing. But contracts are also made up of terms that have not been spelt out. This is often because they are:

• too obvious to mention

• pay and bonus structures that were discussed at interview

• necessary to make the contract work

• custom and practice for that type of business

   

  A written contract should cover the main areas particularly around the individual employment responsibilities. A contract will save a lot of potential misunderstanding further down the line and should provide for the management of disputes and grievances and termination of employment.

  Non-contractual policies and procedures can be varied by the employer without needing to obtain the consent of the staff. It is common to set these out in a staff handbook. This would include where to find the health and safety policy, lone working arrangements, systems, limits of authority and so on. It should also explain the employer’s requirements with regard to ongoing training.

  6.3.3 Staff Handbook

  Some businesses make their staff handbooks part of the contract of employment. This is not ideal for two reasons. First, if an employer fails to follow a policy/procedure (either deliberately or inadvertently) that would give the employee a claim for breach of contract on top of any other claim he/she might have (e.g. unfair dismissal, discrimination, etc.) Second, as businesses evolve, policies and procedures change - if they form part of the employee’s contract of employment, consent of all the employees may be required for any changes.

  6.3.4 Training

  An employer will be liable to third parties for the acts and omissions of the employees for anything they do in course of their employment. This is called a vicarious liability. Ignorance is not a valid defence in law. The ongoing professional development of staff at all levels of agency work should be a part of the business policy. The law around residential letting and management is complex and staff will require information and training. Failure in this area can leave the business at risk.

  6.4 Contracts with contractors

  Before engaging a contractor to supply services for the landlord the agent must consider:

• Is the contractor competent? This is partly tested by practice, but in certain situations the contractor must be qualified. Obviously, for gas work he must be Gas Safe Registered and for electrical work he may also need to be qualified to the appropriate level.

• Is the contractor insured? What kind of insurance does the contractor hold and is it current? Is the public liability element sufficient for the job or the site situation? The insurer may have placed limitations on the policy and it should be checked by the agent, who should also note the date of the renewal and check this annually. Failure to do this basic check would place the agent in breach of his duty of care both to the landlord and possibly the tenant.

• Is the contractor safe? The agent has a legal liability under the Health and Safety at Work Act 1974 to demonstrate he has taken reasonable care to ensure the safety of his employees. The same legislation requires that the agent runs their business in such a way so as not to endanger those NOT in their employ. This would include contractors (as well as tenants, for example). It is simply unacceptable in law, for an agent to engage a contractor to work on the client’s property without having had due regard for that contractor’s safety. The agent must address safety issues with the contractor prior to going on site. In most cases this will be straightforward. However, it becomes more complex if the job involves any working from heights or the possible presence of asbestos. Where the contractor is a firm with five or more employees the contractor must, by law have a written and up to date Health and Safety Policy. In addition to the statutory requirements, the agent also has a duty of care to the contractor to ensure the workplace is accessible. If the property is occupied, the agent must disclose anything around the occupancy that may present any significant risks or issues to the contractor or his team.

  6.4.1 Contract

  Every agent engaging a contractor to work on a landlord’s property is entering into a legal contract; in fact it is the most common contract an agent will ever enter into in the course of an agency business. Surprisingly, however, many agents apply little formality to this important and high risk activity.

  Contractor Terms of Business templates are readily available and should be drafted or, at least adapted, to the agency practice and used with every firm engaged by the business. This contract will specify what, in general terms, the contractor may or may not do. It will set out how and when he will be paid and the qualifications for this. It will set out the required procedures for attending the property, working arrangements, completion procedure and inspections or signing off – is that done by the agent or is the tenant required to confirm the job is complete?

  Crucially, the contract will place upon the contractor a strict liability for compliance with the agent’s requirements around insurance, health and safety requirements, building regulations, disclosure of matters that the agent or landlord should be aware of, rules and limits around sub-contracting, dealing with other parties such as the tenant and landlord. The terms of business will also confirm that the agent is acting on behalf of a principal. It will require the contractor to invoice in the landlord’s name, c/o the agent. This will avoid the agent being liable, should the landlord refuse to permit payment of the contractor’s invoice. The contract may also provide a simple arbitration procedure for disputes about workmanship.

  7. Relationships

  This chapter covers the relationships between:

• agent with landlord

• agent with tenant

• agent with local authority

  7.1 Agent With Landlord

  Every time one party instructs another to act on their behalf an agency agreement is created. In the case of rental property, the agreement is usually between the landlord and the agent authorised to act on the principal’s behalf. This may be limited to finding a tenant to rent the property or it may extend to the full management of the property, creating and signing a tenancy agreement.

  An agency agreement may be created verbally, including the authorisation to sign the tenancy agreement, unless the tenancy is for more than three years, in which case the tenancy itself must be in writing and will need to be created by deed. If the tenancy is by deed, the agent must be authorised by deed to sign on the landlord’s behalf. This is known as a Power of Attorney created under the Powers of Attorney Act 1971.

  7.2 Agent With The Tenant

  Letting agents have an important role to play in ensuring that tenants benefit from a wide choice of quality property and properly trained, professional letting agents should be able to deliver this service. Agents must be an effective bridge between the landlord and the tenant, to ensure the tenant’s rights are protected and the landlord is not disadvantaged. Good relationships do not happen without significant investment in good practice, good manners and a professional outlook. Understanding tenants’ needs and the different cultures around age, sexuality, disability and ethnic origin are essential.

  The private rented sector is regarded as a vital part of local housing provision. Increasingly local housing authorities are looking at the sector to meet many of the housing needs especially around shortages in social housing. Many local authorities are proactive in encouraging good relationship with agents in its area.

  7.3 Agent With Local Authority And Other Agencies

  Most local authorities have a section looking at bringing empty homes back into use and there are sometimes grants available to bring properties up to the required standards. Some local authorities will take a lease on a property and use it for housing people on its waiting list. Local authorities are often keen to work with agents and will have landlords’ forums and accreditation schemes.

  On the other hand, local authorities have enforcement responsibilities and must enforce the law against bad landlords and agents. It is not always widely known that local authorities have a duty to ensure residential properties are in reasonable condition and have powers to enforce owners to bring properties up to standard. Other agencies such as the Health and Safety Executive, Trading Standards and the Police have an enforcement role with agents in the private rented sector.

  8. Agent Obligations

  This chapter looks at the various obligations of an agent.

  8.1 Agent’s Duties To Landlord

  Fiduciary Responsibility

  The fiduciary duty held by an agent contains important obligations that run through every aspect of the agency relationship. Agents need to be clear on this. Under agency law there are a number of principles and rules, which are in essence as follows:

• the agent must perform his contractual duties, and follow the landlord’s instructions

• the agent must do this with ‘due care and skill’ appropriate to the type of work he is doing

• the agent must not delegate his duty (without the principal’s consent)

• the agent must not put himself in a position where his duties to the principal conflict with his own interests

• the agent must not take a ‘secret profit’

• the agent must not take advantage of his position or his principal’s property in order to obtain a benefit for himself, and

• the agent has a duty to account (i.e. he must keep his principal’s money separate from his own, and hand it over, together with all relevant documents and accounts when asked)

   

  This is now explained in further detail below.

  8.1.1 Authority

  Limit of authority

  The agent’s authority can never extend beyond the principal’s power to act on his own behalf. The principal will not be liable for the actions of the agent where the agent has acted beyond the power given to the agent. Where the authority of the agent is general, the authority will only extend to necessary actions. Similarly if a landlord has given authority to find a prospective tenant only, but the agent enters into a tenancy agreement, the landlord will not be bound by that tenancy. The landlord could not evict the tenant without a court order but he will be entitled to recover these costs and damages from the agent. The tenant may also have a claim against the agent who acted outside of the landlord’s limits.

  Discretion

  The agent is entitled to use reasonable discretion in the absence of express authority. If the landlord has not expressly excluded applications from a tenant’s claiming benefits, the agent may or may not make such exclusion where it seems in the best interest of the landlord. If a landlord provides ambiguous instructions the agent may be able to justify his actions as long as he acted in good faith, even though the outcome may not be what the landlord wanted.

  Where there is an expressed limit the agent may not exercise his discretion to go outside of such limits. If a landlord says “No Local Housing Allowance” then the agent has no authority to knowingly let to such a tenant.

  Outside of the law

  An authority given by the landlord to break the law is not enforceable against the agent. For instance a landlord giving instructions which would place an agent in breach of the Equalities Act would find these unenforceable. In such an instance, the agent is within his rights to, and indeed should, refuse to act that way.

  Verbal authority

  Verbal authority is common practice and the extent depends upon the questions of fact at the time. The interpretation of that authority depends upon the circumstances at the time, the common practice in such a situation and the history of the parties’ dealings to date. Unless expressly stated, verbal authority would not permit unusual risks or doing anything out of the ordinary; in particular it would not permit wholesale change of any written terms of business.

  A letting agent is, in normal circumstances, regarded as the ‘professional’ in the relationship and there is an onus on the agent’s part to incorporate all reasonable regulations, practices and features of his profession into his dealings with the landlord, even if they are not expressly set out in writing, or regardless as to whether or not the landlord is aware of such matters.

  Where a landlord gives a verbal authority, particularly where it varies established procedures between the parties, the agent should always seek to confirm such authority in writing.

  Authority implied between the parties

  Implied authority covers all matters subordinate but necessary to carry out anything expressly agreed between the parties. However, there is no implied authority for the agent to carry out anything beyond the scope of his regular business. In the absence of any express consent there is no implied authority to grant a new tenancy to an existing tenant or to find a new tenant when the property becomes vacant. The agent must check that it is okay to re-let or have included such consent in the terms of business already signed. Similarly, an agent has no implied authority to grant credit or write off rent arrears.

  Signing the tenancy agreement or other document

  The common law understanding is that a document is sufficiently signed if a person signs with the authority of someone else, in which case the agent’s signature is regarded as that of the principal. Such authority need not be evidenced in writing except where the signature is required to a deed.

  Delegation

  In the absence of express authority the agent has no authority to delegate any of his duties which require the agent’s personal skill and competence. Authority may be implied for a function which requires no such skill. For instance an agent has no implied authority to instruct another agent to advertise or otherwise assist in finding a tenant. This rule would not apply if the landlord knew of the agent’s intention at the time of instruction or where unforeseen circumstances render it necessary.

  8.1.2 The Agent’s Duties, Responsibilities And Rights

  The law of agency implies certain duties and obligations upon the agent. The following is a guide to the most important:

  Duty of care and skill

  In his book Law of Estates Murdoch points out “where an agent is engaged in a particular profession, it is by the standards of that profession that he will be judged”. The RICS Rent Only Residential Management Code is binding upon RICS members, but is often quoted in Court as being the ‘standards of the profession’ and whilst not binding on every letting agent, the standards it sets are accepted in court as the reasonable standards to which those engaged in property letting and management should work to.

  In the agency relationship the landlord is entitled to assume the agent is professionally competent and is aware of the laws and regulations affecting the business. So far as negligence and professional liability is concerned this is the most significant area and the onus is always upon the agent to show that he acted with due care, diligence and skill. This whole area will always override the terms of business.

  For instance if an agent lets a property without having verified the tenant’s ID or taken references he could face a claim for lack of care because a landlord can easily show that this is a normal business practice.

  The duty of care extends to all aspects of managing the property. A landlord is entitled to assume that his agent will employ suitably qualified tradesmen for work on the property and that tradesmen hold the requisite qualifications and are insured. This applies to the agent’s employees as well as sub-contractors.

  Section 13 of The Supply of Goods and Services Act 1982, implies a duty of care in all agency contracts as a term rather than a condition. This means that a breach of the duty of care will render the agent liable for loss suffered by the principal. If an agent does not take all reasonable steps to ascertain the suitability of the tenant he could be liable to the landlord not only for the loss of rent, but also for all the damage the tenant causes to the property.

  The duty of care is however subordinate to the duty of obedience (see below) and if a landlord lowers his expectation of the agent’s duty, the agent cannot normally be held liable for a breach of duty of care as long as he was faithfully carrying out the landlord’s reasonable instructions.

  Obedience

  The agent is bound to act within the instruction of his principal as long as those instructions are within the law. The agent is simply the agent and the responsibility rests with the landlord.

  The only time an agent can disobey his landlord is if the instructions are unlawful. More likely however, instructions will be ambiguous. An agent, who acts upon a reasonable interpretation of the landlord’s ambiguous instructions, will not be liable for breach of duty of obedience just because it was the wrong interpretation. Here there is a close relationship between obedience and duty of care and skill, and the latter will override if the agent can show that he acted in the landlord’s best interest in interpreting ambiguous instructions.

  Loyalty

  An agent always holds a fiduciary responsibility towards his principal. An agent must never allow personal interest or the interest of a third party to come into conflict with the interests of his principal unless the principal has full knowledge and gives consent. In other words the agent must always do whatever is in the best interests of the landlord.

  An agent (or a member of staff) who lets a property to a friend or family member and does not tell the landlord may be in breach of a duty of loyalty. Similarly an agent must not make secret profits; if a contractor pays a commission, then the agent is not entitled to keep that money without the landlord’s approval. Where an agent has failed to disclose a personal interest the principal may choose to set the transaction aside, or to affirm it and he may claim the profit, or undisclosed profit made.

  Knowledge about the principal and his affairs is confidential and an agent must make no disclosures to third parties about the landlord (apart from certain legal obligations to disclose information, for example about tax or housing benefit) without his consent or use any information to the agent’s personal advantage.

  To account

  This may seem obvious but an agent must account for and be able to pay all money in his possession where such money has been paid by or received for the landlord. This is not limited to rent, but may be a refund of taxation, commissions, interest for late rent, retentions from deposits or undisclosed profits where the agent in not entitled to retain these.

  Performance

  Instructions are specific to the agent. An agent is not automatically entitled to delegate without his principal’s consent. For instance, unless expressly authorised, an agent should not (without consent) engage the services of an inventory clerk or an external check in/out clerk or a sub agent.

  Disclosure

  The agent must not hold themselves out to be the principal. It sounds obvious but an agent must never let a property in his name or the name of his agency unless he is the owner. It is also essential to inform all sub-contractors that this is an agency instruction. Failure to make this disclosure is likely to render the agent liable for the costs incurred.

  Agents’ rights

  The following is a guide to the most important:

• Remuneration. The agent is entitled to charge a fee for the work he does for his principal as an independent professional. The entitlement will depend upon the terms of the agency agreement. If there is no express term, a right is implied that the agent can charge a reasonable sum for the services provided and this will depend upon common practice. However, no agent should rely upon this as the definition as to ‘what is reasonable in all the circumstances’ has been known to lead to expensive litigation.

• Indemnity. In general terms a principal is bound to indemnify the agent against any losses and liabilities incurred on the principal’s behalf. This relates to authorised work and only where the agent has acted lawfully. For instance an agent is unable to seek an indemnity from the landlord for a breach of the gas safety regulations even if the breach was occasioned with the principal’s knowledge and consent.

• Lien. The agent may have the right to exercise a lien (retain the principal’s money or possessions) until debts due to the agent are paid.

   

  8.2 Agent With Tenant

  Although the agent is not ‘engaged’ by the tenant the agent nevertheless provides services to prospective tenants and those who become tenants through the agency relationship.

  The following are the minimum:

  Impartiality. An agent must ensure that none of the parties are disadvantaged because they are unfamiliar with any aspect of the letting process. An agent must offer appropriate explanations and assistance to all, regardless of race, religious belief, gender, sexuality, ethnicity or disability.

  Duty of care. The agency’s primary focus is to the person who is paying for the letting agency services (usually the landlord). However, the agent must also always treat fairly, and professionally, all those involved in the proposed letting such as the prospective tenant, guarantors, referees and so on. If the agent or one of its staff has any personal or business interest in the property, the other parties must be told where relevant. The duty of care extends to the tenant’s safety and the tenant’s right to enjoy quiet possession.

  Discrimination. It is unlawful to discriminate against a prospective guarantor or tenant on the grounds of the protected characteristics listed in the Equalities Act 2010 (disability, race, sexuality etc) and the agent is expected to treat people fairly, professionally and with transparency.

  Fees. The agent must be transparent about any fees or charges the prospective tenant may incur; it is a requirement to disclose these in any advert for the property and before arranging any viewing or on the tenant applying for the property. Any fees or charges payable during or after the tenancy should be clearly stated in the tenancy agreement. All fees must be displayed in a place likely to be seen in the agent’s office and on any website (if any) inclusive of VAT if applicable.

  Holding the property. If the agent agrees to ‘hold’ the property for a prospective tenant the agent must be clear about the terms and these should be placed in writing. If a holding fee is taken then the terms and basis of loss/refund must be clear and fair.

  Offers. Once an offer is accepted but before the tenancy agreement is in force, the agent must inform the applicant whether marketing is to continue.

  Deposits. Any deposit that the tenant may be required to pay at the beginning of a tenancy, which is held by the agent, should be held in a client account. Where the law requires it, any deposit taken on an Assured Shorthold Tenancy must comply with tenancy deposit regulations so that the tenant’s deposit is safe.

  Tenancy Agreement. Tenants must be supplied with a draft Tenancy Agreement to read before signing, accurately describing the property and the term.

  Inventory and schedule of condition. The agent should ensure that the tenant receives an impartial and skilfully drawn inventory/schedule of condition of the property taken immediately prior to move in. It should list and describe the whole property and current condition as a snapshot, inside and out and include any furniture, fittings and equipment.

  Access. An agent may not enter a let property without the tenant’s consent, except in cases of a genuine emergency.

  Consents. If a tenant requests consent during the tenancy, say to have a pet, the agent must put that request to the landlord and consider it on an individual basis. Blanket bans are not fair and may be unenforceable.

  8.3 Landlord Obligations

  Although the landlord will delegate his duties and obligations through the agent, the landlord still has a number of obligations towards the agent.

• Ownership. The landlord is under an obligation to produce evidence to the agent around ownership and changes in ownership. All owners must consent to the letting and the agent is entitled to a full disclosure about ownership. It is not uncommon for an estranged spouse to let behind their partner’s back. In those circumstances the landlord must supply the agent with consents from all of the joint owners.

• Consent. The landlord must obtain any necessary consents to let. This could be from a freeholder or mortgage company. Planning consent or a licence for an HMO may be required. The landlord must produce satisfactory evidence in writing to the agent prior to a let.

• Conditions. There may be conditions or restrictions that affect a letting. A head lease or covenant may place a restriction on the occupier’s age. There may be obligations and restrictions around the use of communal areas, or parking restrictions. The property may have a ‘holiday accommodation only’ restriction or an agricultural tie. The landlord may not conceal these issues from the agent.

• Repair. The landlord must keep the property in repair and ensure it is a reasonably safe place to live for the tenants, visitors and guests.

• The law. Ignorance of the law is no defence and the landlord cannot hide behind a lack of knowledge. Breach of the law may be deliberate by the landlord or he may be ignorant. When the agent has defined the landlord obligations, the agent may need to withdraw if the landlord will not comply.

   

  In all these instances it is the agent’s responsibility as the ‘professional supplying services’ to ensure the landlord is aware of the obligations, to make reasonable enquires and not to act where there is any doubt, or to carry out any instructions for the landlord that are contrary to law or in breach of good practice.

  8.4 Tenant Obligations

  Beyond the terms of the tenancy agreement the tenant has other obligations. These can be summarised (not exhaustively) here:

• Give honest and truthful statements during the tenancy application process.

• Pay a reasonable (market) rent.

• Pay the rent as and when it is due and the bills and service charges.

• Treat with respect and care the landlord’s property, furniture and fittings.

• Report defects to the landlord immediately they become apparent or as soon as is reasonably practical in the circumstances and not permit waste (damage).

• Ask for consent to keep pets, unless already approved by the landlord.

• Follow rules on not smoking.

• Not behave in an anti-social way, particularly around neighbours.

• Take reasonable responsibility for the household and visitors to the property.

• Not bring into full residential occupation other residents without informing the landlord.

• Not leave the accommodation unoccupied for long periods without informing the landlord.

• Give notice to quit in writing, should the tenant wish to bring the tenancy to an end outside of the fixed term and end the tenancy properly.

• Not to use the security deposit in lieu of rent.

• Insure their own possessions.

• To permit the agent access when lawfully requested.

   

  8.5 Handling Client Monies

  Always a sensitive issue and a frequent cause of a dispute between an agent and his client. An agent is always handling money that does not belong to the business. Proper accounting procedures and an audit trail are essential. An agent must seek a good working knowledge of third party accounting procedures and ensure that the boundaries are clear between his own money and that of his clients. The landlord must also be aware of the rules an agent must comply with and know how and when the agent can account to his client for rent and retained deposit monies.

  Where the agent is a member of a professional body the agent must comply with the guidance around client money required by that organisation.

  8.5.1 Basic Good Practice On Keeping A Separate Client Account:

• A detailed record of all transactions relating to a client account.

• Detailed receipts for all money received.

• Accounts must be examined and reported on by a qualified auditor within six months of the end of the accounting year.

• Be able to produce your latest auditor’s report, if asked to do so.

• Retain accounts and records for six years after the end of the accounting period to which they relate.

• When taking over the accounts and records from someone else, ensure that they are completed to the end of the transaction, and are kept for six years.

   

  8.5.2 Client Money Protection

  Firms who are also members of ARLA, NAEA, RICS or the Law Society, are already part of the client money protection schemes operated by their relevant body. Membership of such a scheme is available to all[DW1]  agents and should be considered. Client money protection insurance is also available to agencies that are not members of any trade body. Proposals for mandatory client money protection is currently going through Parliament.

  8.5.3 Deposit Protection

  Agents who take deposits must be members of a deposit protection scheme and deposits must be handled in accordance with the Housing Act 2004 and scheme rules.

  8.6 Display of Fees

  Chapter 3 of Part 3 of the Consumer Rights Act 2015 requires all managing and letting agents to display a list of fees and certain other information in their offices and websites.

  8.6.1 Where to display

  A letting agent must display a list of fees—

• at each of the agent’s premises at which the agent deals face-to-face with persons using or proposing to use services to which the fees relate, and

• at a place in each of those premises at which the list is likely to be seen by such persons.

   

  The agent must also publish a list of the fees on the agent’s website (if it has a website).

  8.6.2 List Of Fees

  The list of fees displayed as required above must include-

• a description of each fee that is sufficient to enable a person who is liable to pay it to understand the service or cost that is covered by the fee or the purpose for which it is imposed (as the case may be),

• in the case of a fee which tenants are liable to pay, an indication of whether the fee relates to each dwelling-house or each tenant under a tenancy of the dwelling-house, and

• the amount of each fee inclusive of any applicable tax or, where the amount of a fee cannot reasonably be determined in advance, a description of how that fee is calculated.

   

  If the agent holds money on behalf of clients, the list of fees must also include a statement as to whether the agent is a member of a client money protection scheme.

  If the agent deals with a tenancy in England (and as a result is required to be a member of a redress scheme), the list of fees must also include a statement-

• that indicates that the agent is a member of a redress scheme, and

• that statement must give the name of the scheme.

   

  8.6.3 What Fees Must Be Shown On The List?

  The items on the list must be all the fees, charges or penalties (however expressed) payable to the agent by a landlord or tenant—

  * in respect of letting agency work carried on by the agent,

  * in respect of property management work carried on by the agent, or

  * otherwise in connection with—

  * an assured tenancy of a dwelling-house, or

  * a dwelling-house that is, has been or is proposed to be let under an assured or assured shorthold tenancy.

  Therefore, for example, the list of fees that is to be displayed must not only include fees payable by a tenant but also all the fees payable by landlord clients such as commission rates.

  It is unclear what the position is if multiple rates of commission are charged for different clients but it’s likely that simply putting the highest commission rate will suffice.

  The list of fees does not need to include-

• the rent payable to a landlord under a tenancy,

• any fees, charges or penalties which the letting agent receives from a landlord under a tenancy on behalf of another person,

• a tenancy deposit, or

• any fees, charges or penalties contained in regulations (of which none has been made at the time of writing).

   

  8.6.4 Breach Of The Duty To Display Fees

  The local weights and measures authority will enforce the legislation.

  Before a financial penalty is imposed, a notice of intent must be served within 6 months of the authority becoming aware of any alleged breach.

  The letting agent may make representations about the proposed penalty within 28 days after which the authority must decide whether to impose a penalty or not (this presumably allows the agent to comply within the 28 period and hopefully for the agent, the notice will be withdrawn).

  If the authority decide to impose a penalty, a final notice must be served seeking payment within 28 days. The financial penalty can be for up to £5,000.

  An appeal is available to the First-tier Tribunal in England or the Residential Property Tribunal in Wales.

  8.7 Redress Schemes For Managing and Letting Agents

  A person who engages in “lettings agency work” or “property management work” where the tenancy is in England must be a member of a redress scheme for dealing with complaints in connection with that work.

  There are three schemes which have received approval under the above provisions:

• Property Redress Scheme - http://www.theprs.co.uk/

• The Property Ombudsman - http://www.tpos.co.uk/index.htm

• Ombudsman Services – Property - http://www.ombudsman-services.org/property.html

   

  Lettings agency work

  Lettings agency work is defined as-

  things done by any person in the course of a business in response to instructions received from—

• person seeking to find another person wishing to rent a dwelling-house in England under a domestic tenancy and, having found such a person, to grant such a tenancy (“a prospective landlord”);

• a person seeking to find a dwelling-house in England to rent under a domestic tenancy and, having found such a dwelling-house, to obtain such a tenancy of it (“a prospective tenant”).

   

  However, “lettings agency work” does not include any of the following things when done by a person who does no other things falling within above-

• publishing advertisements or disseminating information;

• providing a means by which—

  • a prospective landlord or a prospective tenant can, in response to an advertisement or dissemination of information, make direct contact with a prospective tenant or (as the case may be) prospective landlord;

  • a prospective landlord and a prospective tenant can continue to communicate directly with each other.

     

    “Domestic tenancy” means-

• an assured tenancy for the purposes of the Housing Act 1988 (except where the landlord is a provider of social housing or the term is for longer than 21 years and a few other similar exceptions)

• any other tenancy as may be specified by order.

   

  Property management work

  “Property Management work” is defined as:

• things done by any person (“A”) in the course of a business in response to instructions received from another person (“C”) where-

  • C wishes A to arrange services, repairs, maintenance, improvements or insurance or to deal with any other aspect of the management of premises in England on C’s behalf, and

  • the premises consist of or include a dwelling-house let under any of the following tenancies:

    • an assured tenancy for the purposes of the Housing Act 1988;

    • a regulated tenancy for the purposes of the Rent Act 1977;

    • a long lease (for which see section 7 Leasehold Reform, Housing and Urban Development Act 1993) other than one to which Part 2 of the Landlord and Tenant Act 1954 applies;

    • any other tenancy as may be specified by order.

       

      8.7.1 Rules of the scheme

      Each scheme will have their own rules but they are all similar in nature.

      For example, the Property Redress Scheme require the member to provide all consumers with a copy of their internal complaints procedures (if any) and information about the redress scheme when signing any agreement AND at the point of any formal complaint received.

      They require the complainant to first contact the agent to try and resolve the complaint without going to the scheme. But, if there is no success, the scheme will consider the complaint and issue its decision accordingly.

      The scheme will have power to award monetary penalties as well as requiring an apology or some other practical action to mitigate any detriment. There are even powers to award payments for distress or a payment “ in recognition of time and trouble taken to make the complaint”.

      If a member fails to comply with a decision of the scheme, after notification, ultimately the member can be suspended and then terminated. If suspended or terminated, that information will be publicised to the relevant body. If a membership is terminated (and fails to join some other scheme) and continues with letting or management work, that person will be in breach of the legislation and deemed to have failed to join a scheme.

      It is possible for the member to re-join a scheme but only after full payment of all penalties, compliance with the decision and re-paying the membership at double the standard amount of its class.

      8.7.2 Enforcement and penalties

      The enforcing authority is the local authority and if a person has failed to join a redress scheme (on the balance of probabilities) a penalty notice for up to £5000 may be served.

      Where a penalty notice has been served, the person may in the first instance make written representations within 28 days of the penalty notice, after which, an appeal to the First-tier Tribunal is available.

      Any sums received by the local authority in respect of penalties may be used by the authority for any of its functions (which it is submitted will have the effect that they will be keen to issue penalty notices)

      9. Process

      This chapter looks at the process of an agent, including:

• before a landlord is instructed

• viewings

• paperwork with tenant

   

  9.1 Before Start

  A landlord will instruct an agent for a variety of reasons. The landlord may not live locally, may not have sufficient time to manage a property or the expertise in managing a student let or house in multiple occupation. The cheapest agent is not always the best and those who can demonstrate a good business model, well trained staff, good references from other landlords and a good reputation with the local authority are the agents who will enjoy a sustainable place in the market.

  The agent must have a good knowledge of the private rented sector in the area so that the agent can give reliable advice on rental values, market demand and needs. It is not sufficient for an agent to advertise a property at the rental requested by the landlord; the agent has a duty of care to advise the landlord as to the correct rental value and recommend a marketing plan.

  Preparation of the property is important and the agent must guide the landlord about ensuring the property is a safe environment for a tenant and that it has a reasonable level of amenities and is free of defects. An Energy Performance Certificate is required and once these steps have been taken the agent may commence the marketing. The agent must also ensure the property will be vacant and ready to let before committing new tenants. Where the property to be let is already occupied the agent must proceed with caution because time and cost could be wasted by a prospective tenant. Also advertising a property that is not genuinely available to let can lead to a prosecution for the agent.

  The agent’s terms of business must be discussed with the landlord and the level of service selected. The terms of business should be agreed and signed prior to marketing the property. It is an offence under the Accommodation Agencies Act 1953 to advertise a property as available to let without a lawful instruction to let. Signed terms of business are part of your defence to such a claim.

  Finally, the agent must be clear about the landlord’s general requirement for a tenant. Most tenancies will be for a short initial fixed term, but the agent should find out if the property is available for a longer term. Whilst the first tenant may only have a short tenancy, it can be helpful for a tenant to know that this could be a longer let. Where sharers are an option the agent must have regard to HMO management regulations and the greater obligations on the agent and landlord around safety and possibly licensing and planning laws. These matters must be addressed prior to advertising to ensure that the legal requirements can be met for this particular property.

  9.2 Viewings

  There are risks in proceeding with a prospective tenant that has not viewed the property. Where a prospective tenant cannot get to the property for a personal viewing, the agent ought to suggest that the prospective tenant asks a friend or family member to look on their behalf.

  Most genuine prospective tenants view a property and plan to decide to take it or not at that meeting. Agents should therefore accompany viewings and where possible have as much information about the property to assist the decision. The agent should arrive in good time and ensure the property can be unlocked and that it is safe to conduct a viewing. If the property is occupied, the occupier’s consent is required in advance. Where consent is not forthcoming a viewing is not possible. If that happens at short notice the viewer is likely to expect a refund of travelling expenses at the least.

  The common questions relate to the cost of living at the property, so information from the EPC must be offered as well as council tax banding. Questions around smoking, pets, sharers, parking and possibility of extending the tenancy usually arise and it saves time and assists the viewer if the agent is able to give definitive answers to these points.

  The viewing is an opportunity for the agent to have face to face conversations with the viewer and ask relevant questions which may assist in the vetting process. Although the viewer may be aware of the agent’s procedures for applying for a property, the agent should take that information to the viewing and leave copies with the viewer. An explanation of costs and timings should be given at this meeting if the viewer is interested in proceeding.

  An accompanied viewing is a higher risk activity for agency staff. The agent must risk assess this activity and ensure that staff are safe from harm and lone working policies are in place.

  9.3 Paperwork With Tenant

  The paper trail will start at the viewing if not before. Typically:

• EPC available for the viewing.

• Agent’s terms for renting including a clear breakdown of costs that the prospective tenant will incur[DW2] .

   

  For prospective tenants (and guarantors) as is applicable:

• Agency application form/s in plain English with the offer of help to complete if needed. This is likely to ask the questions for the reference process and credit check and request the information the agent will need to verify.

• Proof of age and ID. This should be a photo ID which should be copied and verified for all intended adult occupiers.

• Visa/work permit for any non EU resident, ideally valid to beyond the proposed tenancy term.

• Offer of tenancy letter and guarantor request.

• Draft tenancy agreement for all adult occupiers and for guarantor, plus guarantor terms and conditions.

• Inventory and Schedule of Condition.

• Appliance safety sheets/info for all electrical appliances and smoke detectors.

• Gas Safety Record if appropriate.

• Deposit Prescribed Information and scheme information for any deposit taken.

• How to Rent Guide.

• Move in pack to include information about the agency services around repairs and emergencies, consents as well as relevant information about living at the property and operating heating and so on, refuse/recycling arrangements. The agent’s expectations when the tenancy comes to an end should be expressed at the outset. Some agents include in the move in pack a simple explanation of the main tenancy agreement terms.

  10. Other Considerations

  This chapter looks at other things to look out for and consider in relation to agents including:

• financial and other considerations

• FCA general insurance requirements

• Finance Act

• proceeds of crime

• money laundering

• vicarious liability

  10.1 Financial And Other Considerations

  A company or corporate let is when a company, registered charity, or company incorporated by a trust, a local authority, or government department takes on a residential tenancy agreement as the ‘tenant’, rather than an individual. A company employee or beneficiary of the trust then occupies the premises as a ‘licensee of the tenant’.

  In this capacity as tenant, the company is responsible for all the tenant’s obligations under the terms of the lease, including the payment of rent, council tax and utilities bills and any damage to the property.

  However, it is common practice for the occupant to pay council tax and utilities, while the company pays the rent. The landlord’s only concern is that the various costs are paid, and the company is fully accountable for any default of payments of any of these costs.

  The vast majority of tenancy agreements in the private rented sector are assured shorthold tenancies. It is not unusual for letting agents to use these agreements for company lets. A company cannot sign an AST which is only appropriate for personal lets.

  Many companies who adopt the practice of renting from the private sector will have their own tenancy agreements, which they prefer. If not, the agent must supply a suitable agreement known as a ‘contractual tenancy’ which remains outside of the Housing Act 1988.

  It is desirable for the agent and landlord to know the identity of the person actually living in the property. The agreement will usually allow the property to be occupied by the ’permitted occupier together with their family’. Within a company let, the tenant usually reserves the right to replace the occupant with another employee of the company as a licensee of the tenant. The company tenant will also be responsible for managing the property in accordance with the HMO management regulations, if there are sharers present and for dealing with deposit protection if they sublet via an AST.

  10.2 FCA General Insurance Requirements

  The Financial Conduct Authority (FCA) is now responsible for regulating businesses engaged in the sale or administration of insurance products. Letting agents and property managers fall within the scope of the regulator’s authority. Authorisation may be needed for businesses that are:

• Arranging the purchase of insurance policies: This covers a range of activities including introducing a customer to an insurer or insurance broker, as well as helping someone fill in an application form and forwarding it to an insurer.

• Advising on insurance policies: This includes recommending a specific insurance policy to a customer.

• Dealing as an agent: This includes entering into a contract of insurance with a customer on behalf of the insurer (for example, if you issue cover notes) or vice versa.

• Assisting in the administration and performance of insurance policies: This includes notifying an insurance claim to the insurer and negotiating settlement of the claim on behalf of the customer. However, only handling claims on behalf of the insurer and not the customer will not be a regulated activity. Simply providing information to a claimant or insurer in connection with the assessment of a claim is also not a regulated activity.

  The FCA will provide an application pack to any business that carries out activities that may require authorisation.

  10.3 Finance Act

  The Finance Act 1995 allows overseas landlords or companies whose registered office is overseas (including the Channel Islands and Isle of Man) to apply for tax self-assessment and, if appropriate, an approval certificate can be issued. However, where no certificate is available, the agent collecting the rent has a statutory obligation to implement a tax deduction (at the relevant percentage for the period) before remitting the rents and then paying the tax to HMRC.

  There is also a statutory obligation upon agents to notify HM Revenue and Customs of all rents collected and deductions made on behalf of every UK based landlord (over and above the obligations in respect of non-resident landlords) during the preceding year, where the Revenue demand such information. There are a couple of pieces of legislation under which they may request such a list.

  10.4 Proceeds Of Crime

  If an agent believes a client is acting suspiciously, the agent may decide not to proceed with the transaction. If proceeding with the transaction the agent may be guilty of an offence under the Proceeds of Crime Act if the client has used criminal assets as part of the transaction. A defence under the Act is to submit a suspicious activity report (SAR) and seek permission to undertake the transaction. An unregulated business may not be required by law to submit a SAR, but should still consider doing so as part of a wider ethical obligation. After a successful prosecution for a criminal activity, the court has the power to require an agent and landlord to repay any money received as proceeds from the crime.

  10.5 Money Laundering

  Estate agents are regulated business under the Money Laundering Regulations 2007. Lettings and managing agents are not. However, a letting agent who is also an estate agent will come under the regulations and from July 2009 those firms are required to be registered.

  The regulations cover anyone involved in negotiating a sale and if a rental has a value on the open market (i.e. it can be resold), this may be classed as an estate agency service needing to be registered. All estate agents operating in the UK, including commercial agents, are required to register. If a firm is regulated by the Financial Conduct Authority, that body will be the supervisory authority under the Money Laundering Regulations 2007.

  Registration is compulsory for all those in the regulated sector with failure to register possibly leading to a fine or up to two years in prison.

  The European Commission has announced two new proposals to strengthen existing regulations on anti-money laundering. The Commission says the regulations are also intended to cover new threats and vulnerabilities, by extending coverage to letting agents as well as other estate agents. It also includes an explicit reference to tax crimes. Special regulations can cover anyone dealing in goods or providing high value cash services.

  10.6 Vicarious Liability

  Irrespective of the agency terms and the individual terms agreed with a landlord, an agent is open to negligence claims for acts of omission as well as negligent actions. Increasingly, the courts have little sympathy with an agent who has acted unprofessionally or simply unskilfully or with little knowledge and training. Where a significant claim has been found against an agent, that agent may find it very hard, or at least very expensive to maintain on-going professional indemnity insurance.

  10.6.1 Negligence

  A person who is an employer in law, is responsible for anything done by the employee in the normal course of the employment unless the employer can show that all reasonable steps were taken to prevent the employee from doing it. In the same way a landlord is responsible for the acts of the agent in a property letting/management situation. However, whilst the landlord must indemnify the agent in respect of acts carried out by the agent on behalf of the client, the landlord may have a negligence claim against the agent and be able to recover losses and damages if the agent has acted beyond the terms of business or contrary to the law or best practice.

   

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