More news items for you on a Friday. Starting with a couple of bad news items for letting agents (sorry!).
Agents threatened by rental deposit signature case
Agents listening to solicitor David Smith on a recent Fixflo webinar were shocked to learn that they could be at risk following on from little known High Court decision about the signature of documents on behalf of limited companies.
The case is reported by David on the JMW blog here saying
There is a general statutory requirement under section 44 of the Companies Act 2006, which requires signing by either two directors, a director and a company secretary, or a director before a witness. However, it has never been clear how this should be done in the context of statutory notices, such as section 8 notices under the Housing Act 1988 or tenancy deposit protection certificates. Complying with this requirement can be burdensome and often impractical in the context of a landlord and tenant relationship. The issue was recently considered by the High Court in Northwood Solihull Ltd v Fearn & Ors (2020) EWHC 3538 (QB).
The case decided that as a landlord’s signature is not a statutory requirement on section 8 notices, the failure to comply with section 44 will not invalidate them. Even if strictly speaking it is a requirement, it is something the courts are entitled to overlook.
However, this is not the case with Prescribed Information certificates. Here, anyone signing the form on behalf of a limited company, be they landlord or agent, should ensure that their signature complies with section 44.
Where this has not been done, landlords may be subject to a penalty for breach of section 214 of the Housing Act 2004. Furthermore, any section 21 notice served prior to rectification of the defective prescribed information certificate would be invalidated.
This applies to prescribed information served before 25 March 2015 and is likely to apply to prescribed information served after that date.
David suggests in his article that the best solution to this would be for the government to ‘tweak the regulations’ through the planned Renters Reform Bill – ideally by eliminating the need to sign at all. Read David’s article here.
In the fixflo webinar, David said
The reality of this case is that, as things currently stand, if you as an agent have signed a proscribed [rental deposit] information certificate on behalf of a landlord and you’re a corporate agent, then if it has not been signed by a director and witnessed, then the certificate will be defective.
This means attempting to serve a Section 21 will not be possible, and a tenant could turn around make a claim against you for up to three times the original deposit.
So I am concerned about the possibility of a massive blast of claims against agents because the High Court judgement is retrospective going back six years as well as looking forward.
This could wipe out some lettings agencies if their insurance won’t cover it.
More insurance payout problems for agents
Many agents will have hoped for a payout after the Supreme Court decision which basically supported business interruption insurance clients.
However, it seems that Hiscox, whose policies were sold via Propertymark-approved broker Gallagher, is claiming that agents are not entitled to claim as they were not subject to ‘mandatory closure’. They are now emailing their agent database telling them this.
Agent Ben Williams of Wooton Estate Agents, as reported on the Negotiator, has pointed out that they were following official guidance – guidance issued on 27 March said
In line with advice for certain businesses to close, agents should not open branches to the public during this period, or visit people’s homes to carry out market appraisals.
He wants to know what Proertymark are going to do to support the hundreds of agents who will be out of pocket due to this. The story continues …
The government’s announcement of a £3.5bn fund to fix dangerous cladding on high-rise buildings in England has had a mixed response. Many welcome the announcement, with others saying that it will ‘barely scratch the surface of the cladding crisis’.
For example, the Guardian reports here on four residents affected by the scandal who tell their story.
Summing it, it looks as if the general feeling is that it is a good start but not enough.
Trustpilot and freedom of speech
There is an interesting argument building about reviews left on Trustpilot after a legal firm, Summerfield Browne, won a libel case against a reviewer whose review was, they claimed, false and defamatory.
Trustpilot is, however, saying that this is a threat to freedom of speech, saying
Trustpilot had never been contacted by Summerfield Browne, nor had the review been flagged to Trustpilot using our complaints process for reporting reviews, despite that being freely available to anyone. …
As a public, open, review platform we believe in consumers having the ability to leave feedback – good or bad – about a business at any time. If consumers are left fearful of leaving negative reviews, this could result in consumers being misled about the quality of a business, and businesses being deprived of the valuable feedback from which they can learn, improve and grow …
it is much better for businesses to engage, respond and improve upon the feedback they receive, rather than using legal action to silence consumers.”
What do YOU think?
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- Housing mediation pilot must not replace the usual routes to access justice
- Letting agents urged to help landlords navigate new licensing rules
- Buy to let investors wooed by barrister offering specialist tax advice
- Landlords and tenants get on badly? Don’t you believe it...
- Warning sounded on rent arrears post-lockdown
- Workers at risk by going into workplace unnecessarily, say unions
- Falling rental values are drawing people back in to prime central London
Newsround will be back next week.