The Consumer Contracts (Information, Cancellation & Additional Charges) Regulations 2013 replaced the Distance Selling Regulations & Door Step Selling Regulations. They make it an obligation for 'traders' to give 'consumers' certain information. Do your management agreements meet consumer contracts regulations?
From 13 June 2014, all distance, off-premises and on-premises contracts made will be subject to the 2013 Regulations. Contracts which pre-exist 13 June 2014, are governed by Consumer Protection (Distance Selling) Regulations 2000 and the Cancellation of Contracts made in a Consumer's Home or Place of Work Regulations 2008.
The regulations apply in relation to contract of services, under which a typical letting agent's terms & conditions or management agreements will fall. The regulations require a 'trader' (i.e. the letting agent) to provide the 'consumer' (i.e. the landlord) with certain information before entering into a contract (i.e. terms & conditions of service or management agreement). Certain information must be provided whether this is an 'on-premises contract' or an 'off-premises contract'. Essentially an off-premises contract is where the contract is concluded outwith the business premises of the letting agent. The information to be provided were it is an on-premises contract includes basic information such as the main characteristics of the services to be provided, the identity of the letting agent together with their address and telephone number, prices/fees and also the letting agents complaints handling policy where applicable.
Where the contract is an off-premises contract, the information to be provided also includes information as to the landlord's right to cancel. The landlord will have a right to cancel an 'off-premises' agreement within 14 days after the day on which the contract is entered into. The landlord does not need to give any reason for doing so and simply has to inform the letting agent of his decision to cancel. Where the right to cancel exists, the letting agent must provide a copy of the model cancellation form with the contract as per Regulation 10(1) (b). The landlord can either use a style form which is provided for within the regulations or can simply make ?any other clear statement setting out the decision to cancel the contract.
If it is the parties' intention to commence the provision of the services within the 14 day cancellation period, then you will require to have the landlord specifically agree (in writing) firstly for the provision of services to commence within the 14 days and secondly that they will be liable for any costs incurred by the agent in commencing the services within that 14 day period. If you fail to have the landlord specifically agree that they will be liable for the costs, the agent cannot recover these if the right to cancel is exercised.
Many agents operate a system whereby landlord's sign their Terms of Business electronically online. This would qualify as an off-premises contract. In this case there should be a clear statement in relation to the landlord?s right to cancel that contract within the 14 day period.
Where the contract is concluded at the business premises of the letting agent and both landlord and agent are present, then the 14 day cancellation period does not apply.
Where a right to cancel exists, the cancellation period may extend to a period of 12 months as per Regulation 31 where the letting agent fails to provide the landlord with information on this right within the time limits required by type of contract. In addition to this, the same failure on behalf of the letting agent may also result in them being required to refund all payments to the landlord under Regulation 34.
For more information or advice on management agreements and consumer contracts regulations, please get in touch with our experienced team.
