Rent Collection & Private Landlord Information
- By Landlord Lawyer
- Published 2/10/2008
In a potentially ground breaking case, which could save landlords thousands of pounds, the estate agents Foxtons are being taken to court over the unfair contractual terms in their standard lettings agreements.
Cheshire based law firm R James Hutcheon Solicitors, operators of the Rent Management Service, are defending a claim on behalf of a landlord brought by Foxtons for their commission on the sale of rented property to a tenant. A counter claim has also been rasised by the landlord for the return of the renewal commissions paid to Foxtons whilst the tenant let the property.
In the small print contained in Foxtons terms and conditions, the landlord is contractually obligated to pay a commission of 3% of the sale price if the tenant (initially introduced to the landlord by Foxtons) at a later time purchases the property from the landlord.
Handling the case on behalf of their landlord client, the Principal Solicitor Ronnie Hutcheon believes Foxtons along with other London based letting agents operate unfair and unreasonable contractual terms in many cases, he says:
“…The landlord has not anticipated the commission when he sells the property to his tenant and is astonished and completely surprised when he receives a large bill from Foxtons. It is completely fortuitous that the tenant Foxtons introduced to the property decides at a later time decides to buy the it. It is undeserving that a clause of this nature should be allowed to stand.”
Mr Ronnie Hutcheon further explains:
“Had Foxtons and other letting agents undertaken work to introduced prospective buyers to the property then landlords are happy to pay their reasonable fees. But in this case, like may others, they have not done anything to market and sell the property. I don’t blame landlords making a stand…”
In the court action, the Landlord is defending commissions payable to Foxtons amounting to a staggering £18,000 because he sold the property to the tenant.
Test Case
With respect to unfair contract terms, the Office of Fair Trading is currently in the process of taking Foxtons to the High Court and a preliminary hearing has already been heard. The outcome of the High Court hearing is likely to prove decisive. However despite this test case it is clear that Foxtons are still taking action against their landlord clients.
What if Foxtons are taking action now?
Despite this test case it is clear that Foxtons are still taking action against their landlord clients. Should this occur Mr Ronnie Hutcheon says:
“Faced with a county court action it is important that a landlord files a defence quickly to ensure that a judgement is not registered against him to avoid an adverse credit rating and to defend the action. If the landlord has paid renewal fees in the past, he should put in a counter claim for the return of all the fees dated back to 6 years. The landlord should then ask the court to stay the case pending the OFT test case.”
Landlords can rely upon a recent case which help landlords was decided this year called Foxtons Limited v Palkey & Bicknell & Another 2008. In that case it was decided that as Foxtons were not the effective cause of the sale (they did not directly introduce the purchaser to the property). Instead, they had simply been employed as letting agents on behalf of the landlord in order to find a tenant.
There is also statutory force under Regulation 5 of the Unfair Terms and Consumer Contract Regulations 1999, which landlords can rely on which provides:
“A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer”.
With this in mind, as the transaction involved Foxtons’ Mr Ronnie Hutcheon will be argue for his landlord clients that the standard terms and conditions cause a significant imbalance to the detriment to the landlord consumer. The landlord are for the most part unaware of the clause or do not have any bargaining power to negate the alleged unfair terms and as such the court may find Regulation 5 to have been contravened.
To speak with Hutcheon Solicitors about your unfair renewal fee problem or other letting agent issue please contact us on 0800 083 0626 or email us at contact us by clicking here.
Cheshire based law firm R James Hutcheon Solicitors, operators of the Rent Management Service, are defending a claim on behalf of a landlord brought by Foxtons for their commission on the sale of rented property to a tenant. A counter claim has also been rasised by the landlord for the return of the renewal commissions paid to Foxtons whilst the tenant let the property.
In the small print contained in Foxtons terms and conditions, the landlord is contractually obligated to pay a commission of 3% of the sale price if the tenant (initially introduced to the landlord by Foxtons) at a later time purchases the property from the landlord.
Handling the case on behalf of their landlord client, the Principal Solicitor Ronnie Hutcheon believes Foxtons along with other London based letting agents operate unfair and unreasonable contractual terms in many cases, he says:
“…The landlord has not anticipated the commission when he sells the property to his tenant and is astonished and completely surprised when he receives a large bill from Foxtons. It is completely fortuitous that the tenant Foxtons introduced to the property decides at a later time decides to buy the it. It is undeserving that a clause of this nature should be allowed to stand.”
Mr Ronnie Hutcheon further explains:
“Had Foxtons and other letting agents undertaken work to introduced prospective buyers to the property then landlords are happy to pay their reasonable fees. But in this case, like may others, they have not done anything to market and sell the property. I don’t blame landlords making a stand…”
In the court action, the Landlord is defending commissions payable to Foxtons amounting to a staggering £18,000 because he sold the property to the tenant.
Test Case
With respect to unfair contract terms, the Office of Fair Trading is currently in the process of taking Foxtons to the High Court and a preliminary hearing has already been heard. The outcome of the High Court hearing is likely to prove decisive. However despite this test case it is clear that Foxtons are still taking action against their landlord clients.
What if Foxtons are taking action now?
Despite this test case it is clear that Foxtons are still taking action against their landlord clients. Should this occur Mr Ronnie Hutcheon says:
“Faced with a county court action it is important that a landlord files a defence quickly to ensure that a judgement is not registered against him to avoid an adverse credit rating and to defend the action. If the landlord has paid renewal fees in the past, he should put in a counter claim for the return of all the fees dated back to 6 years. The landlord should then ask the court to stay the case pending the OFT test case.”
Landlords can rely upon a recent case which help landlords was decided this year called Foxtons Limited v Palkey & Bicknell & Another 2008. In that case it was decided that as Foxtons were not the effective cause of the sale (they did not directly introduce the purchaser to the property). Instead, they had simply been employed as letting agents on behalf of the landlord in order to find a tenant.
There is also statutory force under Regulation 5 of the Unfair Terms and Consumer Contract Regulations 1999, which landlords can rely on which provides:
“A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer”.
With this in mind, as the transaction involved Foxtons’ Mr Ronnie Hutcheon will be argue for his landlord clients that the standard terms and conditions cause a significant imbalance to the detriment to the landlord consumer. The landlord are for the most part unaware of the clause or do not have any bargaining power to negate the alleged unfair terms and as such the court may find Regulation 5 to have been contravened.
To speak with Hutcheon Solicitors about your unfair renewal fee problem or other letting agent issue please contact us on 0800 083 0626 or email us at contact us by clicking here.
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2 Responses to "Foxtons to be Sued by Hutcheon Solicitors" 
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said this on 20 Nov 2008 12:46:36 PM UTC
Perhaps it is time for letting agents to scrap renewal fees, but instead charge double in the first term of a tenancy, say 20% for findng a tenant plus 10% management
This is to reflect the true marketing costs etc.
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said this on 18 Dec 2008 10:03:35 AM UTC
I totally agree with Richard!
Furthermore there is an incentive in this market were rental prices are falling for the agent to find a cheaper and better property for the tenants introduced the previous year thus creating greater costs to the landlord through voids and paying a new full fee for a new tenant!
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