We were instructed to act on behalf of the Insured Letting Agent and Insurer. The Insured sourced a tenant for the landlord's c. £2.5m property. The tenant turned the Property into a cannabis farm. The landlord sought to recover the damage caused to the Property in excess of £100,000.

The Insured were appointed on a 'Tenant Find Only' basis to source a tenant for the Claimant's rental property. The property was a substantial one, in a desirable location considered to be worth in excess of £2.5 million. The property was placed to market but initially did not generate much interest due to dated décor and poor quality fixtures and fittings. The property remained untenanted for 6 months. The rental price was reduced and the Insured secured a viewing, following which the tenant expressed an interest and made an offer to rent the property at a sum slightly lower than it was marketed for.

The Insured obtained a copy of the tenant's passport as proof of ID and instructed a third party referencing provider to undertake the usual tenant reference checks. The report was returned advising that the tenant should be declined. The report revealed that the tenant had an unsatisfied CCJ. The Insured advised the landlord of the existence of the CCJ and advised that they had requested further information from the tenant regarding the CCJ. The Insured forwarded a full copy of the report to the landlord by email.

The landlord confirmed that it would await the further information regarding the CCJ, but would like a term in the AST stating that leaving the property after 12 months was obligatory. The landlord chased the Insured for an update a few days later and advised that it had consulted with a solicitor in order to ensure that it was protected and to ensure that the AST was strictly a 12 month contract. The landlord instructed the Insured that it would not proceed with the tenancy to the tenant unless the tenant was prepared to sign a Section 21 notice.

The tenant spoke with the Insured and professed ignorance regarding the CCJ and forwarded a copy of its Experian report which showed a credit score of 904 out of 999. The Insured forwarded a copy of the report to the landlord. Upon receipt the landlord confirmed that pending payment of the deposit and two months rent in advance it would sign the contract immediately. However a few days later the landlord advised that it had concerns about the tenant's CCJ and the risk (following consultation with its solicitor) that the tenant may not vacate the property at the end of the 12 month term. The landlord then seemed to have had a change of heart and five days later confirmed that it would accept the tenant on the terms previously discussed subject to the AST containing a 6 month break clause. The tenancy was agreed and the tenant took up occupation.

Some three months into the tenancy the police raided the property and discovered that the tenant had turned the property into a cannabis farm. The Police found that the tenant had by-passed the electric meter and also installed a high tech heating, ventilation and sprinkler system; thereby causing significant structural and cosmetic damage to the Property.


The landlord blamed the Insured for the damage sustained to the Property. It alleged that the Insured acted negligently and/or in breach of contract by introducing a tenant that was unsuitable for the property and obtaining references that were "wholly inadequate". The landlord denied obtaining a copy of the referencing report prior to the commencement of the Tenancy.

The claim was defended on the basis that the Insured was instructed on a 'Tenant Find Only' basis, the terms and conditions for which provided that the referencing service included a credit check and where appropriate references from an employer and a previous landlord. The terms and conditions provided that all information would be provided to the landlord in order that they could make an informed decision as whether to proceed with the tenancy. We took the view that the Insured in this instance had discharged its contractual obligations and therefore had discharged any duty it could be said to have owed to the landlord and applied to strike out the claim.

Whilst the Insured had followed its procedures here, it demonstrates the importance of ensuring that the client landlord is fulling informed of the outcome of the reference checks and that the decision to proceed with a tenancy is theirs and the potential cost to the Insured and their Insurers when it goes wrong.