When there are problems in a rented property, the general rule is that it is the landlord who is liable for this, and not the agent.
The agent is the middle man, facilitating the agreement between the landlord and the tenant, and getting paid for this. He is not personally liable.
Or is he?
In some circumstances, the law has specifically provided that an agent will also incur liability. The best example of this is under the tenancy deposit regulations.
However what about in other circumstances?
Liability for breach of warranty of agent’s authority
What is not always realised that sometimes agents can be personally liable if they are lead people to believe and act on promises or statements made by them, in circumstances where they did not have any authority to make those promises or statements. Even if they were acting in good faith and did not realise this.
The case law is rather old. The leading case is called Collen v Wright and dates from 1857. It concerns a land agent who arranged a lease without having the proper authority of its owner, who refused to ratify it. The disappointed lessors were held to be entitled to sue the land agent for costs and damages.
My agency law text book sets out five things which need to be established before a claim can be brought:
1. The agent must be ‘acting as agent’
So if he never said he was acting as an agent and the tenant thought he was the owner, this rule will not be available. But in that case he will be liable as ‘principal’ anyway so it won’t matter.
2. The agent must lack authority
Either because he never had it in the first place or if it was ‘revoked’ or canceled. So if an agent puts a property on his website but the landlord then tells him he does not want to let it after all, the agent will, after that time, lack any authority to let that property.
3. The agent must not have warned the third party that there might be a problem
So if the agent says “I think this property will be available to you but I just need to check with the landlord first” he will not be liable if after the tenant has booked a removal van and taken a week off work, it turns out the landlord is withdrawing the property from the market.
4. The third party must have relied on the agents ‘representation’
If the tenant was already booked to move down on that day anyway, then he probably won’t have a claim against the agent if the landlord pulls out.
5. The third party must have suffered damage.
If the tenant was able to find another property as good as or better, which he could move into on the same day, he will have suffered no loss so will have no claim.
Situations with scammers
In my recent post on scammers, I suggested that agents may incur some liability in some cases.
For example if a fraudster contacts an agent about a property, and in good faith he advertises it. If a tenant then rents the property through the agent, only to find that the scammer was not the owner and that he has no right to be there, does he have a claim against the agent?
What do you think?