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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10915
Experience:  Solicitor with 5+ years experience
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My ex-tenant (a limited company) has alleged that, by terminating

Resolved Question:

My ex-tenant (a limited company) has alleged that, by terminating its tenancy, I have breached contract. I say that I have not breached contract, because the contract did not prohibit me from terminating the company's tenancy. It merely probited me from 'entering into a tenancy agrement' with the occupier of my flat (previously the company's sub-tenant). As I have not done this, I have not breached contract.
The company is an estate agency which rents properties from head landlords and sub-lets to residential occupiers on ASTs (Assured Shorthold Tenancies). After six years of this I decided I no longer wanted to do business with this company because of various unpleasant things they had done (some perhaps illegal) to both myself and to the occupier.
I ended the company's tenancy by serving Notice To Quit. The ending of the company's tenancy caused the occupier to become (automatically and unavoidably) my direct tenant. I believe this happens because of common law, and that Section 18 of the Housing Act 1988 also applies. This Act makes it clear that the tenancy continues as an assured shorthold tenancy, now held of a different landlord - in this case, myself.
The occupier remains in occupation, as my tenant, simply because I see no reason to evict her. I don't see why she should lose her home just because I have severed my relationship with a badly-behaved estate agency. There is no clause in my contract with the company requiring me to end the tenancy of any occupier who becomes my tenant in the above way. Nor is there any clause requiring me to pay the company any fee for acquiring a tenant in that way. At one point, I would have been willing to pay the company such a fee, ex-gratia, despite them having no entitlement to it. However, because they have behaved so badly, I am no longer willing to be any more generous to them than the law requires.
The only relevant clause in the contract is a badly worded one (from the company's point of view) which states as follows.
'THE LANDLORD [i.e. me] AGREES WITH [company name] THAT HE / SHE WILL NOT ENTER INTO [sic] TENANCY AGREEMENT SUBSEQUENT TO THIS ONE DIRECTLY OR INDIRECTLY WITH THE OCCUPYING TENANTS. ANY BREACH OF CONTRACT BY THE LANDLORD WILL MAKE THE LANDLORD RESPONSIBLE FOR ALL COURT AND LEGAL COSTS OF [company name]'
I say that I have clearly not breached this clause, because I have NOT entered into any tenancy agreement with the occupier. In fact I had made this very clear, when I wrote to the occupier(and copied that letter to the company) informing her that I was now her landlord. I explained that the reason why I was not giving her a new tenancy agreement document was because no tenancy agreement (written or oral) had been entered into by me.
I hope you will confirm that I have not breached the above contract clause.
Submitted: 2 years ago.
Category: Law
Expert:  Ash replied 2 years ago.
Alex Watts :

Hello my name is ***** ***** I will help you with this.

Alex Watts :

What is the exact clause the company is relying on please?

Customer:

'THE LANDLORD [i.e. me] AGREES WITH [company name] THAT HE / SHE WILL NOT ENTER INTO [sic] TENANCY AGREEMENT SUBSEQUENT TO THIS ONE DIRECTLY OR INDIRECTLY WITH THE OCCUPYING TENANTS. ANY BREACH OF CONTRACT BY THE LANDLORD WILL MAKE THE LANDLORD RESPONSIBLE FOR ALL COURT AND LEGAL COSTS OF [company name]'

Customer:

The exact clause is as I quoted in my question, ie

Customer:

'THE LANDLORD [i.e. me] AGREES WITH [company name] THAT HE / SHE WILL NOT ENTER INTO [sic] TENANCY AGREEMENT SUBSEQUENT TO THIS ONE DIRECTLY OR INDIRECTLY WITH THE OCCUPYING TENANTS. ANY BREACH OF CONTRACT BY THE LANDLORD WILL MAKE THE LANDLORD RESPONSIBLE FOR ALL COURT AND LEGAL COSTS OF [company name]'

Alex Watts :

But the people who you have contracted with now were occupying the property before?

Alex Watts :

And the Ltd company business is always to sublet, they never occupy themselves?

Alex Watts :

Are you able to respond?

Customer:


The company with which I contracted has never occupied my property.

As far as I'm aware the only property the company occupies is the high street shop/office from which it runs its estate agency business.

Much (but not all) of the company's business consists of offering 'guaranteed rent' to landlords by renting from the landlord for the purpose of sub-letting to residential occupiers. The occupiers are not the company's employees - just members of the public looking for somewhere to live. The company's business also includes acting as letting agents, managing agents and sales agents for residential property.



Are you perhaps wondering whether the company's tenancy of my property was a commercial tenancy (thus giving the company the right to apply to court for a new tenancy)? It wasn't, although the company did at one time incorrectly claim that it was. They stopped doing so when I checked the relevant act and pointed out that the tenancy clearly does not satisfy the act's requirements because (a) the property was never occupied by the tenant company itself, and (b) the property was not occupied for business purposes (it is a residential flat). The act would require both those requirements to be met.



Alex Watts :

It is bad news I am afraid. You knew this limited company was in the business of renting out properties and never occupied it themselves.

Alex Watts :

The clause is 'THE LANDLORD [i.e. me] AGREES WITH [company name] THAT HE / SHE WILL NOT ENTER INTO [sic] TENANCY AGREEMENT SUBSEQUENT TO THIS ONE DIRECTLY OR INDIRECTLY WITH THE OCCUPYING TENANTS.'

Alex Watts :

This states occupying tenants.

Alex Watts :

Your main tenant (the company) never occupied the property. It was the sub tenants.

Alex Watts :

The wording could have been better and maybe read sub tenants to occupy but it does not

Alex Watts :

If the matter went to Court a Judge would look at the contract and see what its meaning is

Alex Watts :

On the basis you knew that the Company did not occupy and that the company rented out the property, a Judge is likely to consider that occupying tenants meant the sub tenants and you knew this.

Alex Watts :

If that is the case then sadly you would be in breach of contract and liable.

Alex Watts :

I agree the wording is not as clear as it could be, but on the above basis I am sadly of the view that you would be liable.

Alex Watts :

The agreement did not prevent you from terminating the contract, which is correct. But it also says you can't make a subsequent agreement with the occupying tenants.

Alex Watts :

I am sorry if this is not the answer you want and certainly not the one I want to give you, but I have a duty to be honest

Alex Watts :

Can I clarify anything for you about this today please?

Customer:

But I have NOT entered into an agreement with the occupying tenant!!!!!!

Customer:

Of course the sub-tenant who became my direct tenant was the 'occupying tenant'.

Customer:

The point is - I have not entered into an agreement with her.

Customer:

She became my tenant automatically.

Alex Watts :

So there is no agreement between you and the tenant? Are you accepting rent?

Alex Watts :

If so, then the tenant is your tenant and you have an agreement.

Alex Watts :

It does not have to be written

Alex Watts :

It can be by conduct.

Alex Watts :

If the tenant is paying you rent direct then you have breached the agreement.

Alex Watts :

I am sorry.

Alex Watts :

She may have become your tenant automatically because you terminated the agreement with the main tenant.

Alex Watts :

But as soon as you do that and the sub tenant becomes your main tenant that clause kicks in

Alex Watts :

I am sorry but I think if it went to Court you are likely to lose.

Alex Watts :

Does that clarify the position?

Alex Watts :

If this answers your question could I invite you rate my answer before you leave today.


If the system won’t let you please click reply.



Please bookmark my profile if you wish for future help: http://www.justanswer.co.uk/law/expert-alexwatts/

Customer:
Thankyou for your reply.
Customer:

I do understand that, in some situations, the acceptance of rent, by the owner of a property, can be seen as evidence that the property-owner had entered into a tacit tenancy agreement with the occupier. However, in my situation, I do not think that a judge would say that I had 'entered into a tenancy agreement with the occupier' merely because I had accepted rent from the occupier. Why? Because there is a far better explanation for my rent-accepting behaviour.

Customer:

The better explanation is that I accepted rent, not because I had entered into a tenancy agreement with the occupier, but because I was aware that the occupier had entered into a tenancy agreement with someone else, and the right to receive the occupier's rent had subsequently passed to me.

Customer:

Furthermore, if I am deemed to have 'entered into an agreement', what are the terms of that agreement? When tenancies are created in the way you have described (merely by the acceptance of rent payments) the terms of the tenancy are determined by pattern of payments actually made. In this case, the payments actually made bear no relation to the terms of the occupier's written lease. So - does she now have two separate tenancies, on two different sets of terms? Which set of terms binds her? The more one looks into it, the more absurd it becomes to assume that I had 'entered into a tenancy agreement' merely by accepting rent, when there was already a perfectly good tenancy in place as the reason for accepting rent.

Alex Watts :

There can be two tenancies for the same property. One with you and one with the tenant Landlord.

Alex Watts :

If you are being paid and not the Landlord then in theory the Landlord can apply for possession.

Alex Watts :

No doubt if this was the case the tenant would say they are paying you.

Alex Watts :

Then a Judge would have to decide and make a finding who the tenant was paying and who the tenancy lay with

Alex Watts :

If it was with you then you would be in breach. If it was with your tenant (the company) then you would not be in breach

Alex Watts :

Clearly there is a great deal at risk here and if you lose you would be liable for the costs of your tenant (the company)

Alex Watts :

Does that clarify?

Alex Watts :

If this answers your question could I invite you rate my answer before you leave today.


If the system won’t let you please click reply.



Please bookmark my profile if you wish for future help: http://www.justanswer.co.uk/law/expert-alexwatts/

Customer:
Dear Alex
I would like to end our conversation amicably.


I am paying the fee in full because of the time you have spent, on a complicated question.

If at all possible, I will avoid having to give a rating, as I don't like giving people poor ratings.


Ash, Solicitor
Category: Law
Satisfied Customers: 10915
Experience: Solicitor with 5+ years experience
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