Welcome back to the ProQuals Property Blog; and if you are visiting for the first time, thanks for taking the time out of your busy day to take a look!
In our last post we set a challenge to residential sales and letting agents to test their knowledge against the syllabus for either the NAEA or ARLA Technical Awards. This churned out some interesting results from our point of view. While a lot of you did score well in the sample question papers, I feel there are quite a few letting agents out there who remain blissfully unaware of exactly how many separate pieces of legislation their industry is regulated by.
For this weeks post, I decided to highlight your ‘common law‘ duties as agents. Then we will be reviewing how many different types of authority you as a letting agent can act upon. That’s right, there is more to being an agent then simply getting that contract signed!
So let’s get started!
Common Law Duties of a Letting Agent
In this section we will be focusing on the common law duties letting agents owe their landlord clients, which have derived from custom over time.
How many common law duties that a letting agent owes their landlord client are you able to list? I’ll start you off with an example;
‘to act honestly and in the interests of your client’
Let’s see how many others you can list…
Well there are 8 main common law duties that as agents we owe to all our landlord clients;
1. To act honestly and in the best interests of our landlord clients
2. To avoid any conflicts of interest i.e. taking a fee from both tenant and landlord (who is the client?)
3. Carry out all lawful instructions received from your landlord client (whether you agree with their course of action or not)
4. To ensure competency by exercising reasonable skill and care (due diligence)
5. To disclose your fees i.e. not to make a secret profit from a landlord client
6. To observe confidentiality and not to disclose personal information without authority
7. Not to delegate your landlord clients’ instructions i.e. to another letting agent
8. To account in full to your landlord clients
How many did you correctly list yourself? Have a think about whether any of the above common law duties apply to your tenants as well?
Authorities of a Residential Letting Agent
I think it’s reasonable to assume that we all know that agents will act upon the instructions received from their landlord clients, be they written or oral. Where we receive this direct authority from our landlord client we are deemed to have received the ‘express authority’ of our client. However, this is not the only type of authority that we as agents can act upon, in fact there are 4 different types of authority that we will now review.
What does it mean to ‘ratify’ or have something ‘ratified’ ?
Quite simply put, this is authorising after the event. To place in to context for you, imagine you have a regular landlord client who has just completed the renovation of a property they wish to offer for let. Upon completion your landlord client visits your office, tosses the keys in your direction and says, “It’s ready for market. I’m off on holiday for a couple of weeks, so find me a tenant and sort the tenancy agreement, then I will ratify this on my return.” Now I realise your landlord client is unlikely to use that exact terminology, but hopefully that clarifies the term for you.
Implication of Law (Agent of Necessity)
Have you ever found yourself in a position where, in the absence of your landlord client, you have been forced to instruct a contractor to carry out necessary works at their property. Of course you have!? Have you had a situation whereby your landlord client has refused to pay for the works, due to not having directly authorised you to carry out said works?
Well, the law for once is actually on your side here!
If you can prove that you have acted in the best interests of your landlord client, in terms of securing their investment, then the law ‘implies’ that you have the authority to do so. Obvious examples would include;
1. repairing a ground floor window to avoid a break in
2. instructing a plumber to fix a leaking pipe
The key to acting as ‘agent of necessity’ is as follows;
1. You are unable to contact the landlord
2. The work qualifies as an emergency situation
3. the repairs carried out are deemed to be a reasonable expense to the landlord
That word ‘reasonable’is obviously quite subjective and there the law does not state a figure (£) that is considered to be reasonable. So, as an agent, it is crucial that we use common sense when deciding whether we are dealing with an emergency situation or not.
The most common type of authority you are likely to receive from your landlord client. Simply put, this refers to direct authority i.e. you have received written or oral instructions from your landlord client to carry out an action or works.
In the years I have been training estate and letting agents, I am yet to meet a single agent familiar with the above legal term. So what the heck does it mean!?
Estoppel essentially refers to a landlord client denying that an ‘agency relationship’exists. This could well be a ploy to avoid paying certain fees i.e. not signing your terms of business. Any agent worth their salt will have a historical paper trail of actions carried out on behalf of thei landlord clients i.e. signed terms of business, letters confirming viewings and offers, signed receipt of keys, etc…All this demonstrates that your landlord clients was aware te agency relationship existed and they were knowledgeable of all works carried out as a requirement of that relationship. Therefore, they would not be in a position legally to deny the relationship and forgo payment of your fee.
I hope you have found the above to be of interest, and as always I look forward to receiving your comments. Until next time…