Can landlords pass the blame on to their letting agent when things go wrong?

I did a telephone advice for a tenant last night about the shocking condition of his rented property and what he could do about it.

Apparently the landlord had no idea about the condition of the property and just referred him back to the letting agent. Saying effectively “its nothing to do with me, you’ll have to speak to the agent about it”.

She was clearly of the view that once having instructed an agent, that got her off the hook and that if there were any problems with the property after that, it was down to the agent.

Wrong!

It shows a complete lack of knowledge of the law of agency.

The law of agency

Most people using agents don’t realise that there IS a law of agency.  But it is an important area of law – its actually a type of contract law.

In an agency situation there are three parties

• The principal (ie the landlord)
• The agent (ie the letting agent, and
• The third party (ie the tenant)

The purpose of an agency agreement is to authorise the agent to do things and create contracts with the third party on behalf of the principal. However

It does not mean that the landlord is not liable for what the agent does!

In fact it is the complete opposite of this.

The principal / landlord is liable for EVERYTHING done by the agent – so long as this comes within the ambit of his ‘ostentsible authority’.

Letting agents and ostensible authority

This means that the landlord is liable, personally, for everything done by his agent on his behalf, so long as this is something a letting agent is normally empowered to do, EVEN IF THE AGENT IS ACTING OUTSIDE THE TERMS OF HIS AGENCY AGREEMENT.

After all – how is the tenant supposed to know what the landlord and agent have agreed the agent should do?

A third party is entitled in law to assume that the agent is properly authorised, for the things that he does – so long as these are the sort of things that type of agent would normally do.

So the landlord is responsible for everything the agent does within his ostensible authority – even if this is outside his actual authority.

A landlord’s legal liability v. the agents legal liability

So far as the agents legal liability for things that he does on behalf of his principal are concerned though, he is not liable personally for any of it. The principal is.

So if a property is in poor condition due to the agent failing to organise any of the repair work – the tenant does not sue the agent. He sues the landlord!

If he tries to sue the agent, his claim will fail because he will have sued the wrong person.

This does not mean by the way, that the agent is not liable at all.  If the landlord is sued by the tenant for things done by the agent, he can claim this money back from the agent.  But so far as the TENANT is concerned – he must sue the landlord.

The exceptions to the rule

I said that the agent is not liable for anything – that is not strictly true as there are some exceptions.

The most important being where the agent has failed to protect the deposit – the law was specifically changed in this respect in the Housing Act 2004 to allow tenants to sue the agent as well as the landlord for the penalty for non compliance.

But apart from this – it is the landlord who is liable, NOT the agent.

Unless it is for something the agent did which is clearly outside the remit of any letting agent.  Such as giving bad investment advice or giving them permission to knock the house down.

So when my client’s landlord told him that it was nothing to do with her and that he must speak to the agent about it, she clearly did not appreciate that under the law of agency it WAS down to her.

This is one reason why landlords need to be very careful in their choice of agent. Because you are legally liable for everything they do. And they aren’t!