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Ash
Ash, Solicitor
Category: Property Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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Is a clause for an agent to charge a tenant commission to the

Resolved Question:

Is a clause for an agent to charge a tenant commission to the end of the fixed term even if a new tenant moves in enforceable? Also what is commission? Is this the property management fee?

Submitted: 3 years ago.
Category: Property Law
Expert:  tdlawyer replied 3 years ago.

tdlawyer : Hi thanks for your question. My name is XXXXX XXXXX I can assist with this.
tdlawyer : Yes these types of clauses are normally enforceable where the liability to pay the commission is incurred as soon as you enter into the agreement. Then if the amount of that commission is calculated by reference to the period of the tenancy that's fine. This is the case even if a new tenant moves in.
Customer:

Hi thank you for your answer.

Customer:

I am sorry but I do not understand.. can you explain in simple terms? I do not understand how the landlord or the agent would lose out if a new tenant moves in? What does this mean 'Then if the amount of that commission is calculated by reference to the period of the tenancy that's fine' comission calculated by reference?

tdlawyer : Yes your understanding is correct. So if a commission is agreed at the outset it's fine to say it should be calculated in they way you mentioned.
Customer:

sorry that does not answer my question... how can it be a fair term if a new tenant moves in on the same day as you move out?

Customer:

and you have to pay commission for the rest of the term? does this mean you will be paying commission for the new tenants? how should I proceed to terminate the contract? I have a child under five and I'm a single parent and share with another single parent... and our way of living is not healthy...

Customer:

and you didn't answer my question when I said .. what does this mean.... Then if the amount of that commission is calculated by reference to the period of the tenancy that's fine.

Expert:  Ash replied 3 years ago.
Hello my name is XXXXX XXXXX I will help you with this. Please note that I am a working Solicitor and may be on and offline as I have to attend Court and meet with clients, even at weekends. As such you may not get an instant response when you reply, but rest assured I will be giving your question my immediate attention upon return You do not need to wait here as you will get an email when I reply.

Did you sign the contract agreeing to this please?

Customer: replied 3 years ago.

unfortunately yes, overlooked the clause about commission... focussed on the clause that stated we can move out if landlord agrees and allows us to surrender... i toed and froed regarding the latter clause... because I'm used to having a break clause and only familiar with AST's...when letting agent said 'look you can move out if landlord agrees' so that's when i signed.. was worn down with the fight of a break clause... convenient that the letting agent never pointed out the other clause... i know i signed it etc... but both clause seems to contradict each other one says we can the other says we can't...


 

Expert:  Ash replied 3 years ago.
What does each clause say please?

Customer: replied 3 years ago.

'Strictly with the landlord's or his agents prior written consent and subject to certain conditions that may include the landlords reasonable costs associated with the re-letting of the premises, the tenant might be allowed to surrender or give up this tenancy before it could otherwise lawfully be ended' Before I signed the contract this is the clause I homed in on....


 

Expert:  Ash replied 3 years ago.
Ok and that contradicts with what please?
Customer: replied 3 years ago.

This is a fixed term tenancy agreement for the period specified. There is no provision for the tenants or the landlords to termination the agreement before the expiration of the fixed period. In the event hat both parties agree to vary this clause rent will be due up until the ended of this agreement or when the landlord or a new tenant takes possession of the said property. In addition, if the request to vary this clause was at the request of the tenant, the tenant will reimburse the landlord the letting commission (10% of the rent + VAT) from the date of early termination until the date that this contract was originally due to expire

Expert:  Ash replied 3 years ago.
Sadly I think you are liable.

In the first clause it states Landlords reasonable costs associated with re-letting.

In the second clause it sates the tenant will reimburse the Landlord and letting commission.

In the second one this shows the actual calculation.

So sadly I think that both clauses do not contract, they agree with each other and the second one clarifies the actual position.

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

Can I clarify anything for you about this today please?

Alex

Customer: replied 3 years ago.

accept your response..i thought that might be case.. but just want to understand how it can be a fair clause if a new tenant moves in on the same day? you still have to pay penalties? why?


so don't understand.. do landlords really pay commission 2.5 years in advance.. I didn't as a landlord.. I paid monthly and the letting agent advised, so does mine! If say the landlord is reimbursed, then wouldn't it be a gain for the landlord? is that fair? He gets to pay no commission for the next 14 months, as the agent got their commission from me. If he does pay monthly, he'd be getting a lump sum? for what? is that fair? sorry really want to understand.. then i'll go away

Expert:  Ash replied 3 years ago.
If a new tenant moves in costs are limited. That would generally be the new advertising etc.

But that would be it, no loss of rent. Don't forget if you leave early and you find a tenant landlord costs may be non existent.

Can I clarify anything else?

Alex

Customer: replied 3 years ago.


Yes, sorry I'm still not getting it. Understand that the landlord should not incurr any costs for a new tenant to move in.. But I previously wrote this...


 


'If say the landlord is reimbursed, then wouldn't it be a gain for the landlord? is that fair? He gets to pay no commission for the next 14 months, as the agent got their commission from me. If he does pay monthly, he'd be getting a lump sum? for what? is that fair? sorry really want to understand.. then i'll go away'


 


Can you please explain why tenants are charged the commission until the end of the tenancy agreement? even if new tenants move in on the same day. Surely, the landlord would still have to pay commission to the agent?


 


BotXXXXX XXXXXne who gains, the landlord, ther agent?


 


Many thanks


 

Expert:  Ash replied 3 years ago.
If the landlord has suffered no loss then there is nothing to pay.

The landlord/agent can't profit from it.

They cannot double claim

Alex

Customer: replied 3 years ago.

Thank you for that..


 


Still leaves me feeling confused about the commission.


 


So if a new tenant moves in on the same day i do not have to pay the commission, because the landlord or agent cannot profit? During any voids periods I am liable plus rent plus re-letting costs?


 


 


Many thanks
Roxann

Expert:  Ash replied 3 years ago.
You don't have to pay commission but you may have to pay the re advertising costs.

Does that clarify?

Alex

Customer: replied 3 years ago.

Yes, thank you.. the letting agent said i had to pay the commission until the end even if a new tenant moves in.. the clause doens't mention any senario's, if a new tennat moves in or not (letting commission (10% of the rent + vat) from the date of early termination until the date that this contract was originally due to expire). However, it does when it refers to rent (rent will be due up until the end of this agreement or when the Landlord or a new Tenant takes possession) not sure why they didn't state the same for the commission sentence


 


Previously, when you stated I was still liable, I thought you meant even if a new tenant moves in on the same day.


 


So the last sentence of this clause should have said commission is due until the end of this agreement or went a new tenant takes possession... it's unclear...


 


BotXXXXX XXXXXne, tenants have to pay all re-letting costs, and if a new tenant moves in I only have to pay any commssion due until the new tenancy starts. If the new tenancy agreement starts on the same day as I move out then no commission is due. Wish the agreement was clearer..


 


So if my understanding is correct then I will rate to finish.. hopefully you will say yes :)


 


Roxann

Expert:  Ash replied 3 years ago.
No.

The new tenant will pay commission, you can't Therfore be expected to also pay comission.

They can't profit from the leaving early. You are liable until the new tenant moves in. You are responsble for rent up to that day.

Can I clarify anything ?

Alex

Customer: replied 3 years ago.

phew.. although you said no i wasn't correct.. that is what i was trying to say


 


so that clause is unclear really.


 


No, that is it thank you


 

Expert:  Ash replied 3 years ago.
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