Pulling out of the Contract and ‘Sundry Fees’
The Terms of Business should also include what should happen if the landlord pulls out of the contract and the notice period by both parties to end the contract. Many larger agencies that carry out all three core service levels (Introduction Only, Tenant Find With Rent Collection and Full Management) may have several variations of the above according to the needs of different client landlords. It is not unusual for an agency to have six different pre-drawn up contracts to reflect the slight differences in instruction from their client landlords.
The Terms of Business should also include what should happen if the landlord pulls out of the contract and the notice period by both parties to end the contract. Many larger agencies that carry out all three core service levels (Introduction Only, Tenant Find With Rent Collection and Full Management) may have several variations of the above according to the needs of different client landlords. It is not unusual for an agency to have six different pre-drawn up contracts to reflect the slight differences in instruction from their client landlords.
Disbursement fees should also be specified. These fees are similar to the sundry fees charged by solicitors. An example may be a £20 charge to a tenant if a reminder letter has to be sent for a breach of contract or rent arrears. Such clauses have been upheld by the courts with four provisos; the amount charged must be reasonable, (probably above £25.00 would be excessive), the contract must clearly state the charge, the tenant must have actually breached the tenancy and the frequency of sending the letters must be “reasonable” For example, sending a weekly letter for ongoing rent arrears would almost certainly be deemed to be unreasonable.
On the above, strange as this may sound, all written contracts should state who should receive the £20. The author is aware of a dispute between a landlord and a letting agency where five letters had been sent for rent arrears. The landlord claimed that because his contract had been breached he should receive the £100 which had come out of the deposit. Without going into detailed legal debate about the matter it should be stated that the purpose of a deposit is to indemnify the landlord against any breach of tenancy not to pay agency fees. Technically, such monies should not have come from the deposit unless specified. The agency argued, correctly, that they had done the work in chasing the tenants and sending the letters. The landlord argued, correctly, that as the tenants had not paid rent he had to dip into other funds to cover his mortgage and was entitled to redress to cover loss of interest. In the end they split the difference.
Most agencies will almost certainly have been aware that sometimes the courts can be inconsistent. A judge in Newcastle may uphold such a charge. One in Southampton may not. The clearer the contract and the less ambiguous the term, the more chance of enforceability.