Many agents will be aware of the new consumer legislation which replaces the old Distance Selling Regulations and the Cancellation of Contracts Made in a Consumer’s Home or Place of Work Regulations. However, there is a shortage of simple practical approaches to the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. If you want a more detailed explanation of the legislation then I have written about it more here. This post is a simple guide to what letting and estate agents actually have to do to comply.
For letting and estate agents it is really not that hard. The legislation does not apply to rental contracts so tenancy agreements and the like are simply not covered. It is unlikely to apply to guarantee agreements either because these are collateral to the tenancy agreement.
Therefore the only area of concern is the terms of business between the agent and their vendor or landlord. There is specific information which must be provided to all clients at all times. This is set out in Schedule 1 of the new Regulations. A well structured terms of business should really already have all of this information if it was compliant with various other pre-existing consumer legislation. Schedule 1 requires the following information to be given:
- the main characteristics of the goods or services;
- the identity of the trader including trading name, address, and telephone number;
- the total price of the goods or services inclusive of taxes, or the manner in which the price is to be calculated;
- the time by which the the service will be performed;
- your complaint handling policy;
- the duration of the contract or, if the contract is of indeterminate duration or is to be extended automatically, the conditions for terminating the contract.
The Types of Sale
If this agreement is provided to the client in the agent’s office with no approach having been made to that client before then this is defined as an “on sale” and there is no need for a cancellation notice. No right to cancel will apply.
If the client was originally approached outside the office and the terms of the arrangement were communicated to them at this time whether at home, in the property for sale or rent, or on an organised trip or at an event then this will be an “off sale”. A cancellation notice is required and a 14 day right to cancel will apply.
If the client was dealt with entirely at a distance (i.e. by telephone or post) and the contract was communicated and signed in this way then this will be a “distance sale”. A cancellation notice is required and a right to cancel will exist.
What About This Cancellation Notice?
The cancellation notice is actually fairly simple. A full example is set out in Schedule 3 of the Regulations and this can be used largely as is. You will need to read the notes to adapt it slightly for your specific service but this is not too challenging. I would recommend the use of the model notice as far as possible because it is deemed to automatically be in compliance with the regulations. If you write your own notice then you run the risk that it will not comply with some part of the regulations.
How About Working During the Cancellation Period?
If a right to cancel exists then you will not be able to charge a client for work done during that time if they then exercise their right to cancel unless they have specifically consented to this. You can obtain this consent in a number of ways. It must however be provided in a “durable medium’. This does not include an oral statement but does include email. So a simple form can be added to the cancellation notice where the client states that they request you to start work during the cancellation period and agree to pay any costs incurred or they could simply send an email with a similar statement in it.
There are essentially two ways of dealing with this and the one chosen will probably depend on how often you expect to actually need to give a cancellation notice:
If you are commonly entering into contracts in people’s homes or outside your offices or at least meeting a client and giving them a copy of your contract at this stage then you should probably add the cancellation notice into your terms. The same would apply if you often deal with clients at a distance by post and phone.
If most of your deals with clients are done in your offices without initial meetings elsewhere then you should probably keep the cancellation notice separate and give it to those clients who specifically need it. Obviously this will require a little more staff training to ensure that it is actually given at the right time!