High Court Decision against Estate Agents

The Foxtons Case

On Thursday 9th July 2009, Mr Justice Mann gave a judgment which grants the right to certain individual landlords to reclaim charges against several London-based estate agencies.  The High Court ruling determined that hiking up commission after a tenant’s initial lease period expired was unfair and therefore void.  Furthermore additional commission paid to the estate agent if the tenant later bought the freehold was also held to be unfair and void.

The case was OFT -v- Foxtons Limited [2009] EWHC 1681 and was decided under the Unfair Terms in Consumer Contracts Regulations 1999.  The case obliges Foxtons to pay back potentially millions of pounds to individual landlords and there do not currently appear to be any plans from Foxtons to launch an appeal.
 

The case applies not only to Foxtons, but also to several other estate agents with unfair terms.  The main beneficiaries of the decision are likely to be individual buy-to-let landlords who were, formerly, the main victims of the unfair charges.  Indeed the decision may impact any individual landlord (defined as a “consumer” under the Regulations) and estate agent operating under terms and conditions that are deemed to be unfair.
 

Most estate agents will be fully aware of the ruling, will voluntarily refund landlords any unfair charges, and will have been prepared for this decision for some time.  For some, however, the ruling may lead to claims being made against the estate agent and/or a refusal by estate agents to repay the unfair charges.  For assistance on reaching a commercial resolution to any disputes that may arise as a result of the decision, contact David Richards in the Leathes Prior Dispute Resolution Team on 01603 281101.

In his decision, Mr Justice Mann indicated that several of the terms that were deemed to be unfair might have been enforceable had they been in plain and intelligible language.  It is therefore essential that terms & conditions are properly drafted and kept up-to-date.  If you are responsible for terms & conditions of an estate agency and would like advice and assistance on the implications of the decision and the steps you can take to avoid liability, contact Richard Fox on 01603 281127.  Richard is an Associate Solicitor in Leathes Prior’s Commercial Team and specialises in all contractual matters, including the drafting and amending of terms and conditions of business.