SUGAR Posted August 11, 2008 Report Share Posted August 11, 2008 Hi just registered with this site because i need some advice and not sure where to go. We have just let our property out 2 weeks ago. The tenant paid 6 months rent up front. We use a letting agent to manage the letting and after 2 weeks of still receiving no money from the agent we contcted them again. I have been told that under the Royal Institute of Chartered Surveryors (RICS) which the agents are a part of it is illegal for them to pay us the rent up front which has been paid to them. Horrified to find out after the rental has been agreed that this money will now be sitting in thier bank instead of mine is an understatement. Yes i know that i have the comfort of knowing as long as the agent doesnt rip me off that i have 6 months rent paid. But this still doesnt seem right to me. I have contacted RICS but they person who gives out information is on holiday for a week and i can leave a message but will not get a response till after then Can anyone shed any light on the legalities on this matter pls or point me as the where i may be able to find the answer. After spending several years representing tenants on their legal rights i did not think i would be on the receiving end of a tenancy issue but hey ho it just goes to show... lol Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted August 11, 2008 Report Share Posted August 11, 2008 New one on me !!!!!!!!! Have had agents do this for me in the past and hand it over ..no problems ! .........but that was with T find only, not managed service.... The Rodent Link to comment Share on other sites More sharing options...
ajlandlord Posted August 11, 2008 Report Share Posted August 11, 2008 I actually run a property management company in London and this is a new one on me also- though I'm not a member of RICS. Try check out the FAQ's on the RICS website, they may have some details about it there. Link to comment Share on other sites More sharing options...
SPEEDTWIN Posted August 11, 2008 Report Share Posted August 11, 2008 I do not believe there is any thing illegal about about paying the rent allready paid upfront by the tenant. If so ask them to quote which law it is, does it come under housing law or finace law? Also ask them to point you in the direction on the RICS website or show some doc by RICS that it is a requirement. But saying that there can be certain legal implications in accepting 6 months rent in advance depending on the type of tenancy and rent period etc. If you take rent in advance it alters the nature of the original contract and if you wanted to serve a Section 21 at the end of the tenancy period it would have to be dated six months in advance, this stuation is backed up by recent case law, Church commissioners V Meya (2006). The approach adopted in the County Courts under Section 5(3)(d) of the housing act 1988 was that if the rent under the fixed term tenancy was payable weekly the tenancy arising at the end of the fixed term would be a weekly tenancy, but if the rent was paid monthly the periods would be monthly, and so on. There are a few holes in this arguement because i think it relates to a periodic tenancy so dont know how it stands up during the fixed term. Also as they have already taken the money on your behalf so it wouldnt matter it is already handed over. Having said all this I strongly believe the agent is doing it to keep the funds in there a/c and if a s21 was served it would need a very very savey professional tenant to defend it on the above reasons and not nessarally win. Link to comment Share on other sites More sharing options...
SUGAR Posted August 11, 2008 Author Report Share Posted August 11, 2008 I understand the tenancy terms and implications etc as i said i have been advising client on thier legal rights regarding tenancies for a few years now, so i am fully aware of what implications are for rent collection periods etc. However i am drawing a blank on the RICS webby and certainly cant find faq am a bit simple on the things i do not know...lol. Will keep looking. I have tried many common and uncommon searches on the web and am only comming up with sites who charge for advice ie association of small landlords etc. Agents did not say housing or finance law just regs under RICS and the other one oea i think. Think i am gonna have to push this with them further again tomorrow over the phone for now. Ty fo the answers so far. Link to comment Share on other sites More sharing options...
amc1 Posted August 11, 2008 Report Share Posted August 11, 2008 Not heard of this before. Our tenant before the present one paid 6 months up front and the agents passed it straight to us. Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted August 11, 2008 Report Share Posted August 11, 2008 I do not believe there is any thing illegal about about paying the rent allready paid upfront by the tenant. If so ask them to quote which law it is, does it come under housing law or finace law? Also ask them to point you in the direction on the RICS website or show some doc by RICS that it is a requirement. But saying that there can be certain legal implications in accepting 6 months rent in advance depending on the type of tenancy and rent period etc. If you take rent in advance it alters the nature of the original contract and if you wanted to serve a Section 21 at the end of the tenancy period it would have to be dated six months in advance, this stuation is backed up by recent case law, Church commissioners V Meya (2006). The approach adopted in the County Courts under Section 5(3)(d) of the housing act 1988 was that if the rent under the fixed term tenancy was payable weekly the tenancy arising at the end of the fixed term would be a weekly tenancy, but if the rent was paid monthly the periods would be monthly, and so on. There are a few holes in this arguement because i think it relates to a periodic tenancy so dont know how it stands up during the fixed term. Also as they have already taken the money on your behalf so it wouldnt matter it is already handed over. Having said all this I strongly believe the agent is doing it to keep the funds in there a/c and if a s21 was served it would need a very very savey professional tenant to defend it on the above reasons and not nessarally win. Appreciate the gist of the thread BUT If ast defines pyt as mthly ..........and 6 pymts are made on one occasion i cannot see why the above should occur ? The Rodent Link to comment Share on other sites More sharing options...
SPEEDTWIN Posted August 11, 2008 Report Share Posted August 11, 2008 Well we all accept that if the deposit is not protected the ast turns into a sat and a s21 cant be used. Is it such a big jump to assume the nature of the payment dates change because because it has been accepted in a differant maner? One of the legal rules of a contract (if thats the right word) is acceptance so I suppose accepting 6 months up front is the key. A bit like accepting a key back from a tenant can be classed as accepting the end of a tenancy when a notice to quit is the correct way. The pointI made earlier about "If you take rent in advance it alters the nature of the original contract" came from the legal dept of ARLA. But i still think a tenant would need a big pair of b--ls to use that as a defence. But i suppose it it all about how much you know when and if you go to court. If you dont protect the deposit and serve a s21 but it doesnt get defended you will more than likely win. Link to comment Share on other sites More sharing options...
J4L Posted August 12, 2008 Report Share Posted August 12, 2008 is there a deposit here? No mention by the OP! Link to comment Share on other sites More sharing options...
SUGAR Posted August 12, 2008 Author Report Share Posted August 12, 2008 is there a deposit here? No mention by the OP! yes he paid a deposit which has gone into tds Link to comment Share on other sites More sharing options...
SUGAR Posted August 12, 2008 Author Report Share Posted August 12, 2008 OK I HAVE BEEN IN TOUCH WITH THE LETTING/EASTATE AGENTS AGAIN AND ASKED FOR SOMETHING IN WRITING TOSUBSTANTIATE THEIR CLAIMS ON THIS AS I HAVE HAD NO LUCK ON THE NET REGARDING THIS. WILL KEEP YOU POSTED ON OUT COME Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted August 12, 2008 Report Share Posted August 12, 2008 If it is illegal ....then it is against the law ie ...to break a statute ....ask them to quote which act/statute section/subsection clause etc ...........or forward monies immediately .. The Rodent Link to comment Share on other sites More sharing options...
J4L Posted August 12, 2008 Report Share Posted August 12, 2008 I'd be asking the LA for transfer of the deposit immediately, and request the money for the 6 months at the same time. I can see nothing on the RICS website that even comes close to their explanation so as Simon suggests ask for an Act that they're quoting from. Link to comment Share on other sites More sharing options...
SUGAR Posted August 12, 2008 Author Report Share Posted August 12, 2008 i did that as im up on the housing and finance laws - they couldnt reply on that, only with the RICS that is why i have come to the conclusion they are talking about code of practices rather than laws. Therefore if COP then no law not illegal and i want me money...lol The Deposit is being held by agents the words of letter are ' held by ******* as stakeholder for the term of the tenancy - we are a member of The Tenancy Deposit Scheme as operated by The Dispute Service Limited'. Regarding the rent As the agents said that it was due to them managing the property for us that this was the case with the monies held (rent now not deposit) i questioned if they nolonger managed the property then would they have to pay the money over. They replied to this that we are tied into a 6month contract to have them as managers. I have checked the only piece of paperwork that refers to them managing the property and where they should have inserted a period/ time for the management it has been left blank by them. Opps mistake on their part me thinks... Therefore it goes on to say that the contract maybe terminated by either party provided 14 days notice is given in writing. As the initial date of the length of the contract has been ommited does this mean that the 14 days written notice is no longer required as the contract does not have a term. Or is this one of those implied terms that the tenancy is for 6 months and therfore they are the managers of it for 6 months and notice has to be given to terminate our contract with them...lol Hmm contract law now ?. Very interesting that just4lets is advising to withdraw - is there anything in Estate Agent Laws that may be different from pure letting agent terms? Link to comment Share on other sites More sharing options...
SPEEDTWIN Posted August 12, 2008 Report Share Posted August 12, 2008 You are the client, if you havent signed up to a set period with the agent you could give a months notice and demand the rent paid upfront. Even if you are going to stay with them they should pay you all rents paid upfront. I had a similar siuatation not so long ago where the tenant had paid 6 months up front and the L/L wanted it. The only differance was the tenant had asked me to hold on to it and pay the l/l on a month to month basis. So i was in the unusall position of having the l/l and the tenants as clients. I didnt mind cos i had the cash in my a/c getting interest. The L/L was a real pain in the backside anyway and i said i would only release the funds if he got writen permission from the tenant also i quoted some of the info i mentioned in my earlier post never heard another word from him. Link to comment Share on other sites More sharing options...
J4L Posted August 12, 2008 Report Share Posted August 12, 2008 Agree with above, you are the client of the LA not the other way around. You pay the agent for providing a service, which hopefully he will provide satisfactorily. Personally I think that an agents 'job' with regard to collection of rent is that they are responsible for chasing should it not arrive from the tenant and if/when it does should be passing that over as soon as they get it. It shouldn't matter if they collect 1 month or 6 you should still receive it. Admittedly, I'd be deducting the 6 months commission from the total but you'd expect that wouldn't you? I have dealt with loads of Codes of Practices over the years in differing professions and I've never heard of anything so daft be included in one so chances are they are pulling the wool . . . . . From a LL's point of view i'd be requesting the money back (as above) and also join a free scheme (DPS) and get them to return the deposit to you to place in that scheme. Expect them to deduct their commission, they probably will but don't take the RICS excuse that they need to keep it. Give them notice of 14 days and request all the paperwork they've done in installing the tenant. To your last question, the rules for estate agents that let are exactly the same as for letting agents and landlords. Link to comment Share on other sites More sharing options...
GPEL Posted August 13, 2008 Report Share Posted August 13, 2008 Taking 6 months in advance doesn't change the nature of the AST, or the notice period if the rent due date is the first of the month. However you need to be aware that strictly speaking, the money paid in advance is the tenants less anything drawn down and due to the landlord on the rent due date. This could become a problem if the tenancy is ended early and rent not drawn down isn't refunded. For example, half way through the tenancy the landlord requests an early surrender of the tenancy and the tenant agrees, but the landlord then subsequently refuses to refund anything. Even if RICS did stipulate their members have to hold any rent paid in advance as part of membership of their club, that doesn't make it illegal just non-compliant with RICS rules. It's not necessarily a bad thing the agent holding rent in advance as it gives peace of mind to the tenant that their money is being protected, giving peace of mind to all parties. However, it should be held in a bonded client account and the circumstances explained to the owner beforehand. Question I'd be asking is why was 6 months taken in advance and what has been agreed once the tenancy goes periodic? Link to comment Share on other sites More sharing options...
SUGAR Posted August 13, 2008 Author Report Share Posted August 13, 2008 Interesting that poeple wish to know ins and outs of situation but here goes Tenant needed to find somewhere to live quickly - his relatioship broke down and had to move out of matrimonal home (did not have to leave legally b4 that one is asked, just to stop the arguing whilst going thru divorce and selling matrimonal home) He is towards the elderly end of the age scale and has no experience of renting or having to find accommodation, due to lenght of time in own home. Recently became self employed wich was verified however unable to provide the la with required paperwork for self employment, he said he was not short of money and was able to guarentee rent by paying 6 months up front to secure tenancy. He passed credit check - privided details of ownership and evidence of attempt to sell jointly owned property wich is worth a considerably amount of money. Also provided copies of bank statements to show income and expenditure through bank. We were asked if we would consider this tenant as he had failed the letting agents measures to provide the self employment paperwork - we signed a specialy drafted letter accepting him under these conditions - as he wouldbe paying up front we were happy as we would have the mortgage money sitting in our banks instead of wondering from one month to another if we would receive the rent. This was what we told the letting agent when they asked if we were happy to take this tenant. Not at any point was it ever mentioned that we would not in fact be receiving the money as it had been paid (all in one go). It was not untill over 2 weeks in to the tenancy and after continous phone calls and still no rent received from the lettign agents that we were told we were not going to be getting all the money in one go it would be paid from month to month (for the reasons in the op) In addition to what i have already stated in the op other parts of the conversation i did not include due not wanting to ramble about un important parts of this tenancy lol included. The la manager saying it was something which should have been explained to us and he was sorry it had not been and they havnt learnt an important lesson about training their staff better - in the next breath he claimed it was something which they have not experienced b4 at their agency so it was something they did not know to inform us and they have only found out now due to the accounts department. He also said this way they can remove any moneies needed for repairs or contractor work without having to contact us for payment. I explaind that had the tenant not paid up front then they would not be able to do this so i would prefer it if they did not adotp this practice. Also that they have written permission from us as to how much may be spent in an absolute emergency should they not be able to contact us and i would expect them to stick to this. It ok to put up argument as to why it is a good idea for the agent keeping the money but i have a better one for him not keeping the money if its not infact illegal to part with it to us. What if the la goes bust. hmmmmm then we have a tenant who has paid 6 months rent and will expect to live in quiet enjoyment for this duration. Then we have us the landlord who will have to foot the mortgage our selves untill more rent becomes due. I personaly think this is a far more persuasive argument than why the la should continue to remain in possession of the funds. The tenant is given the same protection in law reguarding his money as we the landlords are if he had failed to pay rent. If he owed us whoopie do we can take him to small claims court. This is the same protection offered to tenant if he has the need to pay up front. What can i say our system sucks. Only the tenant is protected however should the la go bust because he has the law on his side - his tenancy is paid for regardless of landlord getting the money. This is not a situation which is beneficial to the landlord and one i certainly dont want to worry about for the next 6 months we thought the worry over the mortgage payments weresorted only to find out they have remained but from a different source. Yes they are a reputable agents but we did not do a credit check on them or ask them to provide proof of financial stability like we did of the tenant. We have less financial information and trust of the agents i guess than the tenant at this point. S o what i am tryin to say to above post is i have no peace of mind at all. But im sure the la and the tenant are happy. There was no intention of running the tennacy into stat periodic status as the tenant has already requested that if he continues to rent he can do the same in 6 months if the landlord preferred. This will be open to discussion at the time we decide if we continue to rent to him and if he requires to stay on. However if the tenancy ran into periodic and we accept the rental 6 monthly with out issuing a tenancy agreement then we have allowed a 6 monthly stat period tenancy as that will become the rent payment period and would have to give notice accordingly. If we requested and the tenant paid weekly rent then weekly stat periodic etc for same for monthly. Link to comment Share on other sites More sharing options...
SPEEDTWIN Posted August 13, 2008 Report Share Posted August 13, 2008 Taking 6 months in advance doesn't change the nature of the AST, or the notice period Now I dont profess to be any kind of expert thats one reason we joined ARLA but it was their legal dept that said about it changing the nature of the orginal contract. So they must have had a good reason for stating that. GPEL what do do base your arguement that it doesnt or cant? Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted August 13, 2008 Report Share Posted August 13, 2008 If problem with periodic at end of fixed p then issue new ast (6mth) ... Speedtwin I dont see how 6 paymts in one affects terms in ast ie monthly ........and reiterate as per my earlier post and in agreement with gpel ... The question is the other way around ...what arguement is their for ast to be ignored and deemed 6mth payment cycle ? presumably aral legal dept ...quoted statutes etc ....if so which ones ? ...........I am no legal expert but have had to correct my acc bank manager and solicitor on more than one occasion .......LOL!!!!!!!! The Rodent Link to comment Share on other sites More sharing options...
SPEEDTWIN Posted August 13, 2008 Report Share Posted August 13, 2008 Good point. The only info they gave me was the info about Church commissioners V Meya (2006). and the approach adopted in the County Courts under Section 5(3)(d) of the housing act 1988 was that if the rent under the fixed term tenancy was payable weekly the tenancy arising at the end of the fixed term would be a weekly tenancy, but if the rent was paid monthly the periods would be monthly, and so on. I havent read thro it I just took their word for it (maybe that where I'm going wrong) Quote"I dont see how 6 paymts in one affects terms in ast ie monthly" Quote nor do I but you could also argue, I dont see how not protecting the deposit invalidates the s21 or accepting the keys from a tenants removes the need for a valid notice to quit. I dont know if it is right and it wont stop me taking 6 months upfront if offered it just may make me think about it more carefully and who i am taking off from. Link to comment Share on other sites More sharing options...
SUGAR Posted August 13, 2008 Author Report Share Posted August 13, 2008 argh my post has been hijacked about tenancy terms lol Rental payment period only affects the tenancy when it has been allowed to laspes into stat periodic as far as i am aware. So if tenant pay's 6 monthly regardless of what the terms of the ast stated you have allowed a contract to occur on 6 monthly payments. Therefore if no new ast tenancy is signed after the initial 6months has expired then u are setting yourself up for an stat periodic 6 month agreement and due notice would have to be served. Link to comment Share on other sites More sharing options...
GPEL Posted August 13, 2008 Report Share Posted August 13, 2008 What if the LA goes bust - that's why you get them to prove the money is held in a bonded client account. The money is still the tenants, regardless of where it's held, less that due on the rent payment day. Having said that, I think it should all be paid to the landlord. Word your tenancy correctly regarding rent due dates, iaw the housing act for notice periods and you can take 6 months in advance without worry. In the hierarchy of precedence, contractual obligations are low down the pecking order and don't override Acts, common law, case law etc, in general terms. For example, if no mention is made in the tenancy agreement of 6 months paid in advance but receipt the tenant for 6 monthly payments made in advance. Link to comment Share on other sites More sharing options...
SUGAR Posted August 13, 2008 Author Report Share Posted August 13, 2008 Sorry GPEL may not have been clear in my post was refering to contractual obligations if the fixed term has ended without new tenancy being issued. Then the rental payment period forms the tenancy cntractual period therefore housing law would substiantiate the 6 month period of the tenancy if you were to take 6 months up front and not issue a tenancy agreement. You would have automaticaly implied a 6 month stat periodic tenancy. Link to comment Share on other sites More sharing options...
SUGAR Posted August 13, 2008 Author Report Share Posted August 13, 2008 oh and btw thanx for info on client bonded acc how do these work and what should i be looking for as the landlord for them to show me, just for future ref of course Link to comment Share on other sites More sharing options...
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