Landlords still being hit by unfair terms from letting agents

City lawyers are urging both letting agents and consumer landlords to check the terms of their agreement to make sure that they are fair.

Both sides could lose out for different reasons if they are not.

Landlords could find themselves out of pocket, while letting agents could find themselves coming under scrutiny from the Office of Fair Trading (OFT).

Peter Sutherland, at Andersons Solicitors in Nottingham, said: "The OFT is determined to crack down on unfair terms and the Property Ombudsman has just issued a code of practice for letting agents to follow.

"The code states that letting agents cannot include sales commissions in their agreements with landlords. Nor can they charge commission where the landlord instructs someone else to renew the lease."

Last year, the OFT successfully pursued an enforcement case against Foxtons for breaching the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR).

Foxtons agreed to amend some of its terms concerning sales and commissions after the High Court ruled they they were unfair.

The OFT estimates that its enforcement order has provided an annual benefit of at least £4.4m for landlords that use Foxtons.

However, although there is no longer a problem with Foxtons, the OFT is concerned that other letting agents seem to be unaware of the High Court ruling and are still offering terms that may be unfair.

Peter said: "The Foxtons case should have been a wake-up call for both landlords and agents but despite this, consumer landlords are still being presented with potentially unfair terms in contracts with some letting agents.

"Agents should be aware that the Property Ombudsman will now be carrying out comprehensive monitoring procedures to ensure the code is being followed. This will involve mystery shopping exercises and customer satisfaction surveys."

For more information please contact Peter Sutherland.

Many struggling businesses 'now technically insolvent'

A new report says many companies are now technically insolvent and could be forced out of business by an increase in interest rates. Marcus Brown says the report emphasises the need for firms to get tougher over debt collection to avoid being dragged down.

The insolvency trade body R3 surveyed 500 companies when compiling its Business Distress Index.

It found that one in six businesses ind it difficult to pay invoices on time.

R3 President Steven Law said: "The increase in businesses struggling to pay bills on time is worrying as this is the technical definition of insolvency.

"This coupled with an increase in the number of businesses using the maximum overdraft facility, which stands at 1 in 5, suggests that many businesses are running on empty. For many, an increase in interest rates could push them over the edge."

The figures are not only alarming for the businesses involved but also for those who trade with them.

They emphasise the need to take action to recover unpaid debts as soon as problems arise. If you delay, you could see debtors going out of business before they pay your invoice.

Even at the height of the recession, many firms were reluctant to get tough over late invoice payments for fear of damaging their relationship with the customer - even though that customer was racking up significant debts.

Many firms got their fingers burnt that way and are now far less shy taking legal action as soon as debts start to mount up and polite requests for paymrent are ignored.

A simple letter from a solicitor is often enough to ensure payment.

The realisation that you are now taking the matter seriously means that debtors usually take notice immediately and settle very quickly.

However, if the debtor still doesn't pay after sending a solicitors letter then a firm can take Court action to recoverthe debt, interest on the debt and some of the legal costs.

Firms should not be afraid to pursue these options. It's only natural to want to maintain a good relationship with a customer but at the same time, a customer who doesn't pay is not worth keeping.

For more information call Marcus Brown on 0115 988 6728.

Make sure your cookies don't break the law

Firms that use websites to promote their business are being urged not to fall foul of new EU legislation relating to consumer policy.

Nottingham lawyers Andersons Solicitors say new rules mean that firms will soon have to get permission before they can store files on a consumer's computer.

The new law is designed to control the use of small files such as cookies.

These can be installed on a customer's computer to store information about their interests and preferences based on the products they've viewed and purchased online in the past.

It means that when they revisit the website that created the cookie, they can be shown products and services specifically tailored to their interests. The cookies can also store sensitive information such as a person's payment details.

Cookies and similar are used by most businesses and organisations in the UK.

Peter Sutherland of Andersons Solicitors in Nottingham, said that while cookies can make online purchasing much easier, they also raise issues of privacy.

"On 25th May this year, an amendment to the EU's Privacy and Electronic Communications Directive will require businesses to obtain consent from consumers before they can use cookies and similar files.

"It will give consumers more control over what kind of information they will allow companies to store.

"The Information Commissioner is liaising with businesses to see how the changes can be implemented but firms need to be aware that they may have to change the way they do things to avoid breaking the law in the future."

For more information please contact Peter Sutherland on 0115 988 6714 or email psutherland@andersonssolicitors.co.uk.

Be careful what you 'agree to' by email

Nottingham Solicitors are warning landlords to be careful what they write in emails or they could end up being thousands of pounds out of pocket.

If follows the case of a property management company which effectively validated a break clause by "accepting" it as an email - even though the lease required more formal notification.

The case involved a tenant who leased commercial premises for a term of ten years.

There was a break clause that allowed for termination of the lease after five years providing that the tenant gave six months notice served by hand or by special delivery post.

After five years, the tenant sent the notice by email to the property management company, which replied saying that it 'accepted' the notice.

The landlord later said that the management company's acceptance of the email was merely an acknowledgement of receipt and should not have been taken as an acceptance of notice to exercise the break clause.

Peter Sutherland of Andersons Solicitors in Nottingham says the case is a salutary lesson for all landlords because the court ruled in favour of the tenant.

"The court held that the acceptance of the email by the management company had to be taken as an acceptance of the break clause notice.

"Once the email had been accepted, the tenant was entitled to conclude that nothing more had to be done.

"It may seem a harsh decision but it shows the need to be careful when agreeing or seeming to agree to any legal document, even if it is in an informal email."

For more information contact Peter Sutherland on 0115 947 0641.

Firms don't have to give in to compensation claims

The belief in 'compensation culture' is so ingrained that firms will sometimes give in to claims they could successfully defend because they fear the court system is biased against them. Marcus Brown says a recent case shows that such fears are unjustified.

A myth has developed over the last 10 years that we live in a compensation culture in which a tiny mistake could see a firm being sued for hundreds of thousands of pounds.

Thankfully, like all myths, this is simply not true. A few sensational stories about extravagant employment or injury claims may sometimes hit the headlines but they rarely turn out to be accurate and are certainly not typical.

As long ago as 2004, the Better Regulation Task Force conducted a study into compensation culture and concluded that it didn't exist. If anything, the overall number of claims was going down rather than increasing.

That did little to dislodge the myth, however, which is unfortunate because it can affect the way firms approach employment tribunals or health and safety matters. Unfortunately, many firms will cave in and settle when faced with claims because, according to a recent CBI survey, they believe the justice system is ineffective or skewed against them.

It is important, of course, to pay due attention to safety issues and ensure all the correct legal procedures are followed when dealing with staff and customers, but firms should not be afraid to defend claims where appropriate.

A recent case before the Court of Appeal shows that companies can stand their ground and win.

It involved a supermarket customer who tripped over a basket which had been discarded near the check-out counter. She fell and sustained a painful shoulder injury.

The woman sued alleging that the supermarket had been negligent. The Court of Appeal, however, rejected her claim for compensation.

The court accepted the supermarket's evidence that it had good safety measures in place and had done all it reasonably could to prevent accidents happening.

The area was checked for potential hazards every five minutes or so. It was likely that the stray basket has been discarded by another shopper and had only bee left there a very short time.

The court also accepted that the staff were trained to remove stray items and so it was difficult to see what more the supermarket could have done to prevent the accident.

The customer's argument that a member of staff should have been assigned to check all aisles to identify hazards was setting too high a standard when other safety measures were already in place.

In any case, even if such a person had been employed, the accident could still have happened.

This common sense approach by the court system is the norm when dealing with compensation claims. Firms should not be afraid to defend a case if they have done nothing wrong. It is cheaper and far more satisfying than simply caving in to unreasonable claims.

For more information please contact Marcus Brown on 0115 947 0641 or email mbrown@andersonssolicitors.co.uk

Businesses urging key executives to sign pre-nups

There's a growing trend for businesses to ask key executives to sign pre-nups before marrying, according to Nottingham lawyers.

The aim is to protect the company against the disruption that could be caused if equity partners or directors are forced to sell their shares to fund a future divorce settlement.

Sarah Perkins, of Andersons Solicitors in Nottingham, said the move made prefect business sense even though it may appear as an intrusion into a person's personal affairs.

"Firms don't want to find that a director suddenly has to sell their interest in the business because it could be very damaging and destabilising - especially in difficult trading conditions like those we're experiencing now.

"That's why many firms are putting gentle pressure on equity partners to sign a pre-nup to ensure a financial settlement that doesn't lead to panic measures involving the business.

"Some company owners are also asking their children to draw up pre-nups. This is seen as a way of protecting family interests many years down the line after the children have inherited business."

The increased interest in pre-nups follows a landmark ruling in the Supreme Court in October involving Katrin Radmacher, who is the heiress to a multi-million pound family business. The court upheld a pre-nup agreement which limited the amount of money she had to give her former husband.

The ruling established that pre-nups are enforceable in the UK as long as they are properly drawn up and fair to both sides.

For more information call Sarah Perkins on 0115 947 0641.

Spread Christmas cheer but avoid costly claims

The problem of compensation claims arising out of office Christmas parties are now legendary and yet employers continue to get caught out every year. Laura Forster looks at how to ensure everyone has a good time without landing the firm in trouble.

In spite of the recession - maybe even because of it - many companies are pressing ahead with their Christmas Party as usual this year.

Hopefully most parties will pass without any incidents but some could lead to expensive claims so it is sensible for employers to take a few precautions.

Discrimination and harassment claims arising out of unwanted remarks are an obvious risk. With the alcohol flowing at an office party it only takes one member of staff to go too far and there could be a problem. To make matters worse, the offensive remarks don't even have to be made at the official company function. Something said at the pre-party drinks in the local pub could also land the employer in trouble as discrimination laws could still apply.

The answer is for firms to make sure their anti-discrimination policies are up to date and that every employee knows about them. Getting staff to read and sign such documents would also help when defending any future tribunal hearing.

Providing food, soft drinks and keeping a limit on the free bar will also show that a firm is adopting a responsible approach.

Remember also that third party harassment could now be an issues. For example, you could be held responsible if your employees are pestered by clients or suppliers that you invite to the party. This could be made worse if incidents have happened in the past and your firm hasn't done enough to deal with them.

Transport is another issue that still catches people out. You have a duty of care to your employees and sometimes you even have to save them from themselves. This involves such things as trying to prevent them driving home after they've drunk too much. You obviously can't order people not to drive but you need to show you acted responsibly. Handing out phone numbers of taxi firms or ending the party while public transport is still running would help your position enormously if a case ever ended up in court or tribunal.

The much maligned health and safety laws also need to be taken into account. A little forethought can prevent a lot of problems. For example, don't ask staff to put up Christmas decorations and then leave them to spin precariously on office swivel chairs. Make sure that decorations don't cover emergency exit signs and are not placed too close to heat sources.

It's hard for the boss to win at this time of the year. If they don't throw a party they can be branded a scrooge. If they do then they run the risk of getting into trouble if things get put of hand.

Each year the law seems to get a little more complicated and the employer's duty of care seems to increase with it/ It's essential to be pro-active and get the right policies in place. Otherwise the Christmas party could produce a painful, expensive hangover.

For more information please contact Laura Forster on 0115 947 0641 or email lforster@andersonssolicitors.co.uk.

Ruling could help businesses but hurt landlords

Businesses that lease offices in converted houses may now be able to buy the freehold at reduced rates following a court ruling. Peter Sutherland explains how the decision could be bad news for landlords but an unexpected gift for their tenants.

The simple question of "what is a house?" could be worth millions of pounds to Nottinghamshire landlords and their commercial tenants.

It's important because the law allows tenants in blocks of flats to get together and exercise their right to collective enforcement. This is a legal mechanism that allows them to buy the freehold of their homes on favourable terms as long as there is a majority in favour.

It usually applies to private tenants but recently three small businesses who leased offices in converted town houses argued that it should apply to them as well. They knew that if they succeeded they would be able to buy at prices way below the going rate on the open market.

The tenants argued that the buildings they occupied were still essentially houses and sought to exercise their right to collective enfranchisement under the Leasehold Reform Act 1967.

The landlords objected saying the Act did not apply in this case because the buildings were used exclusively for business purposes.

The case went all the way to the Court of Appeal which has ruled in favour of the tenants. Lord Neuberger said the definition of house could "extend to buildings exclusively used for business purposes".

He said: "Once could, it seems to me, quite naturally describe a building built as a town house, which had subsequently been internally converted into offices, as a 'house used as offices': hence it would 'reasonably be called' a house, even though it was not used for residential purposes."

The ruling could lead to several enfranchisement claims from commercial tenants who will see it as an opportunity to buy the freehold of their offices on favourable terms.

Nottingham could be among areas most affected as it contains so many offices situated in properties originally built as houses.

For more information please contact Peter Sutherland on 0115 988 6714 or email psutherland@andersonssolicitors.co.uk

Don't let late payers get away scot free

Businesses throughout the UK and Europe have written off a staggering £245bn over the last year because of late payments. Alex Brooke-Smith explains some simple steps that will help firms recover money that could be vital to their survival.

It's surprising how many firms are prepared to write off debts than pursue them to enforce payment.

The debt buyer Intrum Justitia surveyed 6,000 companies across Britain and Europe and found that the amount of debt that had been written off rose by £24bn to £245bn over the last 12 months.

One of the reasons for this is that many businesses, especially smaller ones, feel they simply don't have the time or the expertise to deal with the problem. This obviously has a major impact on their cash flow and the overall health of their business, yet there is so much they can do with minimal effort if they are prepared to exercise their legal rights.

It's even possible to turn credit control into a profit making exercise because under the Late Payment of Commercial Debts (Interest) Act 1998, firms are allowed to charge interest on overdue invoices. This punitive charge is currently 8% above base rate. They are entitled to levy a statutory late payment fee between £40 and £100 depending on the size of the debt.

The extra money recovered in this way is often more than enough to cover the cost of pursuing the debt.

The first step may be to simply ask your solicitor to draft a letter requesting payment and outlining what action may be taken if the debt is not settled.

Most companies will pay up immediately when they see you are serious about exercising your rights but for more hardened cases, it may be necessary to initiate legal proceedings. This steps up the pressure even further and often results in payment before the matter gets to court.

Firms should be aware that they are protected from unilateral changes to contract terms such as when a customer suddenly decides that they are going to pay less than the amount agreed.

This can often happen with larger business customers who feel they can flex their corporate muscle and buying power. The supplier is entitled to insist on sticking to the original terms. This is basic contract law which cannot be overturned on the whim of one of the parties involved.

If one of your business customers does decide to pay less than agreed then you will almost certainly be able to claim interest on the outstanding amount and impose a late payment charge under the Payment of Commercial Debts (Interest) Act 1998.

You should be cautious if you are tempted to continue with contracts after you have received a letter from the customer informing you that they are going to pay less. If you go ahead and fulfil the order it may suggest that you have accepted the new terms.

Late payers put suppliers in a difficult situation and the dilemma is often one of balancing the need to be paid on time with the need to maintain a good relationship with an important customer, but for those who feel the time has come to act, the law offers a considerable level of protection.

For more information on Debt Recovery please contact Alex Brooke-Smith on 0115 988 6707 or email abrooke-smith@andersonssolicitors.co.uk.

Landlords getting tougher over break clauses

Extreme times lead to extreme measures and the world of landlord and tenant is no exception. Peter Sutherland looks at why disputes over break clauses are on the rise.

The standard break clauses to be found in most commercial tenancy agreements have often led to disputes, but the numbers have risen dramatically over the last few years.

The recession is the main reason, of course.

Declining orders mean more and more firms are using the break clause option to downsize or just find a better deal elsewhere. In their haste to depart and save money, tenants may not be too careful about meeting all the conditions of the lease, particularly relating to maintenance and repairs.

The landlord is just as likely to be money conscious. In better times, a tenant departure might only be a temporary inconvenience. Now it can be the difference between staying afloat or going out of business.

Faced with the prospect of empty premises they have very little chance of re-letting. landlords increasingly respond by poring over the small print of the tenancy agreement to make sure everything is in order.

It means there have been several recent cases where landlords have challenged break notices for technical reasons.

One example involved a tenant who tried to exercise the break clause by giving the landlord six months notice as required by the tenancy agreement. The landlord refused to accept it because the tenant had failed to also give notice to the property's management company - another requirement of the lease.

The tenant argued this was a mere technicality. The case went all the way to the Court of Appeal where the landlord eventually won and prevented the break clause being exercised.

In another case, a commercial tenant was prevented from terminating a lease because it gave notice under the name of its new parent company rather than its original name which was still on the tenancy agreement. This was in spite of the fact that the landlord had been informed of the change of name and rent invoices were sent to the parent company.

Conditions relating to vacant possession, repairs and maintenance can also lead to disputes as landlords take a tougher stance. They need their properties to be in a fit state so they can re-let them as soon as possible.

It means that if work is not carried out to an acceptable standard or is not completed exactly on time then the landlord may refuse to accept the break. Some tenants try to prevent any problems by asking the landlord for guidance on work required but the landlord is under no obligation to help.

Landlords who do choose to help should make it clear that any information they give does not over-rise the need to comply with the terms of the lease.

Both sides are entitled to protect their interests and so now, more than ever, both sides must try to make sure they comply exactly with every detail of the terms and conditions in the lease. Failure to do so could prove very costly.

For more information please contact Peter Sutherland on 0115 947 0641 or email psutherland@andersonssolicitors.co.uk.