Here is a question to the blog clinic from Kevin who is a landlord:
I am a landlord of three properties. At the beginning of the year I transferred the management service from one agent to another.
One of the properties was occupied and the tenants had been paying the rent to the previous agent. They were notified of the change of management in writing with directions that their rent should be paid to the new agent.
Basically, I have not received any rent for this property since February and I suspect that it has been paid to the wrong agent but they are not co-operating. They said they couldn’t help because they didn’t manage the property anymore, they asked for the request in writing and said there would be an administration fee. A letter was sent at the end of April but there has been no response.
No one can contact the tenants because the previous agent did not provide their contact details and they do not respond to letters.
So I have two questions:
1) Is it possible to issue notice for rent arrears even if I suspect the rent has been paid but to the wrong party?
2) Is the previous agent liable in any way if they have received rent but not forwarded it on?
I should also add that the new agent visited the property recently and there is evidence that it is still occupied.
You have two options here – a claim against the agents and a claim against the tenants.
1. Claiming against the tenants
So far as a claim against the tenants is concerned, it will to a certain extent depend on the wording of the notice they were sent regarding the change of agent.
This should have
- Told them that your former agent is no longer authorised to accept rent on your behalf
- Given details of the new payment arrangements with the new agent, and
- Notified them that if payment is made to anyone other than your new agents after a specified date, this will not satisfy their liability for rent.
If after receiving such a notice they continue to pay rent to the old agent, then (unless the old agent forwards it on to you) I don’t see why you should not serve notice on them for rent arrears.
Paying the wrong person will not discharge their liability for rent, but this will only be the case if the notice they were served was clear and unequivocal on this point.
In any event you will not want tenants who fail to contact you to remain after the end of their fixed term so I suggest you arrange for service of a section 21 notice anyway.
I suppose one of the problems is that you don’t really know whether they are paying rent or not. The fact that the tenants are un contactable rather suggests that they may be failing to pay at all.
2. Claiming against the agents
Turning to the agents, their lack of cooperation is wholly inexcusable, and I suspect that they may be in financial difficulties. If the tenant has been paying rent to them, they are very much in the wrong if they have not forwarded this to you.
Where people or companies act as agent for a landlord they are under what is known as a ‘fiduciary duty’ which means that they have a very strong duty of care. This will continue after the end of the agency in respect of any payments received by them in respect of their agency work.
Indeed a court will almost certainly find that they are holding this money for you on trust, and that they are liable to account to you not only for the money paid to them in error, but also any profit they may have obtained from using this money.
I would suggest you write to them saying:
- that you require them to provide details of any rent which has been paid to them which they have not paid over to you, and pay this over within 7 days
- that if they fail to do this, you reserve the right to issue proceedings asking for an account of all money due to you
- that you will be issuing a complaint against them (if they are a member of any regulatory body such as ARLA or the Property Ombudsman), or (if they are not a member of any such organisation)
- that you will be reporting them to the local Trading Standards Office
The action you take after this will really depend on the response received from the agents and the tenants.
So far contact with the tenants is concerned, as they are being uncooperative, I suggest that all communications be delivered to the property by the agents personally and that they have an independent witness with them so they can prove that (for example) notices and letters were actually served on the tenants, if this is later denied.