Court order prevents Foxtons from using certain terms and conditions
The Office of Fair Trading (OFT) has obtained a final court order against the letting agent Foxtons preventing it from using certain terms and conditions in its agreements with landlords.
It follows a High Court ruling that some of the terms concerning sales and commissions were unfair.
In giving his judgment at the original High Court hearing, Mr Justice Mann said some of the clauses represented a time bomb for landlords. They required a landlord to pay substantial commission when a tenant remained in a property after the initial period of tenancy had expired – even if Foxtons played no part in persuading the tenant to stay and did nothing to collect the rent or manage the property.
The case was brought by the OFT under the Unfair Terms in Consumer Contracts Regulations 1999 which protect consumers against unfair standard terms in contracts with traders. Foxtons had until 29th January to appeal but did not do so.
The OFT says Foxtons has altered its standard contract with landlords as a result of the case. The changes include “making the liability to pay renewal commission more transparent, reducing the commission payable on renewal, and limiting it to two renewals.
“Commission is also now only payable where the original tenant remains in occupation, and the landlord will get a pro rata refund where the tenant leaves the property before the date set out in his lease.”
The order obtained by the OFT also declared that certain other terms are “unfair, not binding, and may not be used or relied upon in contracts with consumer landlords”.
These are: “Terms which require landlords to pay renewal commission to Foxtons after the sale of their property to a third party because the original tenant remains in occupation.
“Terms which require landlords to pay a sales commission to Foxtons in the event they sell the property to their tenant.”
The OFT says it is writing to a number of other letting agents to make it clear that they are expected to comply with the law as set out in this case.
Please contact us if you would like more information about commercial property issues or matters relating to terms and conditions in contracts.
March 2010
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