I Trust You So Much That We Should Document What You Just Said - Rental Agreements

Several years in corporate banking taught me the importance of the terms and wording in credit agreements and other legal documents. This is especially so when you have lawyers being paid $750/hour (which is cheap compared with our American friends!) to find ways to use agreements to one party’s favour or detriment. And much more so in the case of distressed companies, where decisions are sometimes hastily made based on verbal agreements, which may end up falling apart when papers are actually drafted.

You don’t want to take the idea of documenting everything too far, though…

But important items – particularly points that can foreseeably be disputed – should be documented.  

When I moved to the UK this fall, I quickly realized how inefficient stupid backwards different the process is compared with Canada. In London, it is common that landlords hire a letting agent and pay them commissions of ~10-14%+ of the entire lease rent + a whole bunch of other fees; my favourite of which is a per-viewing fee which so clearly sets up a wrong incentive. In Canada, most landlords do viewings themselves, and then copy+paste a nice little rental agreement that they probably found on Google.

It is one of the things that makes me proud to be Canadian – that our landlords are so sophisticated that they can rent out their own properties all by themselves.

Just Sign It, Don’t Worry!

The first step in my UK letting process was to sign what was basically a 7-page term sheet/application form. I brought up several issues with the term sheet – some of which didn’t make any sense, and some of which I thought were (in my view) too landlord-friendly…but was assured these could just be addressed in the full tenant agreement.

Then I received the first draft of the full 17-page tenant agreement. I spent about 1.5 hours going through it, and created a Word Doc with about 1.5 pages of – again – things that didn’t make sense or were unfairly landlord-friendly.

Some of my notes were:

• Tenants could not do anything “immoral” on the property
  • I was really hoping the landlord was a heathen
     
• If I died on the property, I (or I guess it would be my estate) would have to reimburse the landlord for losses or damages to the property
  • I guess it wouldn't be worth haunting the house after death
     
• I had to sweep the fireplace/chimney at the end of the lease term
  • …except there was no fireplace in the flat
     
• If I was in breach of the agreement, I would have to pay for the landlord’s parking costs related to rectifying the breach
  • OK, I get that I would be liable for reasonable costs, but I thought it was odd they would specifically include parking costs in the wording
     
• A fee that was payable by the landlord in the term sheet was now payable by the tenant in the draft lease agreement
  • This issue was subsequently settled
     
• No mention of whose responsibility it was to maintain the garden
  • The leasing agent advised multiple times that it would be the landlord’s responsibility

I was basically told that nothing was negotiable.  Even things that didn’t make sense like the fireplace/chimney.

Anyway, I only had a few days left on my temporary AirBnB home so I was starting to panic. I’m all for new experiences and all, but I didn’t want to be homeless 2 weeks after moving to London. So, I held my nose and signed.

You Should Not Have to Shoot Yourself In the Foot To Know It Hurts

A few days after moving in, I spoke directly with the landlord, who (i) purchased a lawnmower that would be stored at the flat, (ii) arranged for a gardener to complete only the initial weeding/gardening, and (iii) told me that weeding/gardening thereafter be only the tenant's responsibility.

I told the landlord that his leasing agent advised that the garden would not be our responsibility, and he responded that he made it clear to his agent that the garden upkeep was the tenant’s responsibility. Since the gardening responsibility was not explicitly covered in the lease agreement, I figured the disagreement was not so much between the landlord and me, but his agent (who made the misrepresentation) and me.

After a few weeks of back-and-forth, the leasing agent got his “director” involved, and then put forth an argument that this supposed disagreement has already been resolved because the landlord purchased a lawnmower that I can use. The director called this a compromise.

After reading the email, I felt like this:

actually, no wait, it was more like this:

I replied generally stating (i) the timeline and facts, including the fact that the agent has admitted to making the misrepresentation, (ii) the damages are quantifiable as one year of gardener costs, and (iii) I failed to see any “compromise” since the landlord did not purchase the lawnmower as a “gift” to me and that I am still entirely responsible for the garden when I should not be in any way.

To be perfectly honest, the cost of hiring a gardener for a year is really not material, and neither is the time to maintain the garden ourselves. However, what I do not like is when people make blatant misrepresentations (intentional or otherwise) and try to weasel their way out of it. I understand people make mistakes. If the letting agent simply said, “Oops, we apologize, we kinda screwed up there…would you be OK if you maintain the garden?” I’d probably say yes, given it is a pretty small sum.

Given they are being weaselly about this situation, my strategy is to take a very aggressive stance and hope that they reimburse me a small portion of that 10-14% in fees they made to just make me go away. The fun part about this situation is that I don’t get the sense the letting agent knows it is a very small sum – probably about £15 every 6-8 weeks. Stay tuned!