Signing Property Notices and Certificates as a Corporate Landlord or Agent

11th January 2021 Commercial Litigation

It has not always been entirely clear what is required of a company when signing property notices and certificates in its capacity as a landlord or letting agent. There is a general statutory requirement under section 44 of the Companies Act 2006, which requires signing by either two directors, a director and a company secretary, or a director before a witness. However, it has never been clear how this should be done in the context of statutory notices, such as section 8 notices under the Housing Act 1988 or tenancy deposit protection certificates. Complying with this requirement can be burdensome and often impractical in the context of a landlord and tenant relationship. The issue was recently considered by the High Court in Northwood Solihull Ltd v Fearn & Ors (2020) EWHC 3538 (QB).

Section 8 Notices

A landlord’s signature is not a statutory requirement for a section 8 notice. The prescribed notice provides that it can “be signed and dated by the landlord or licensor or the landlord’s or licensor’s agent (someone acting for the landlord or licensor)”. The court considered that a section 8 notice is a preliminary warning to the tenant and a precondition for the landlord, which can be signed by someone other than the landlord. In that context it appeared that the correct approach would be to allow for less formal methods of verifying the notice and that corporate landlords did not need to comply with section 44 of the Companies Act 2006.

However, it is important that the correct parties are crossed out under the signature in paragraph 6 of the section 8 notice to indicate who and in what capacity is signing the notice. It appears that if a director signs without full compliance with section 44 of the Companies Act 2006, then they are signing as a landlord’s agent rather than as a landlord. If they wish to sign as the landlord, i.e. on behalf of the company, then compliance with section 44 of the Companies Act 2006 will be required. This would seem to apply equally to corporate letting agents signing notices on behalf of the landlord.

Even if the signature block has the signing party incorrectly stated, this may make little difference in practice. In Northwood the landlord’s agent had signed and crossed out everything else, but “landlord” below the signature field whereas they should have left the box saying “landlord’s agent”. The court accepted the section 8 notice as a valid notice as it considered that “this was not a determinative matter”.

So, section 8 notices are relatively easy to deal with. However, not all documents are so simple.

Prescribed Information Certification

In Northwood, the prescribed information had been given to the tenants in July 2014, pre-Deregulation Act 2015. The requirement at the time was that a prescribed information certificate “signed by the landlord” had to be given to the tenant (Housing (Tenancy Deposits) (Prescribed Information) Order SI 2007/797, Paragraph 2(1)(g)).

Following previous decisions, the court considered that the corporate landlord should have signed the prescribed information certificate in accordance with section 44 of the Companies Act 2006.

Accordingly, where prescribed information has been provided by a corporate landlord before the relevant provisions of the Deregulation Act 2015 came into effect, i.e. prior to 25 March 2015, this should have been signed in accordance with section 44 of the Companies Act 2006, i.e. by two company directors, a director and a secretary, or a director and a witness. Where this has not been done, landlords may be subject to a penalty for breach of section 214 of the Housing Act 2004. Furthermore, any section 21 notice served prior to rectification of the defective prescribed information certificate would be invalidated.

As far as prescribed information provided after 26 March 2015 is concerned, the position is less clear, but may not be all that different. While the new wording of the relevant provision now refers to a signature by “the landlord or the initial agent”, it is likely that this is specific enough that a corporate landlord (or a corporate agent) should comply with section 44 of the Companies Act 2006. In any event, this is the safer approach to adopt.

Comments

This is a bit of an odd decision. First, the High Court said it did not have to consider whether the Deregulation Act changes were relevant as the tenancy pre-dated them. However, it seems to have been incorrect on this. The whole point of amending the prescribed information regulations by way of the Deregulation Act as opposed to just changing the regulations by order was that the change was backdated until 2007, the start of the deposit protection regime. This backdated application is unusual and required Parliamentary approval. However, this meant that the changes made the changes made in the Deregulation Act were applied retrospectively to all deposits and so should have been in force in this case.

Whether or not employees of landlords and agents can sign in the light of the Deregulation Act is harder to decide. The Deregulation Act only allows for singing by someone acting on the landlord’s behalf in relation to a deposit. It is arguable that a landlord could agree that the employees of a letting agent are doing this. Agents could tweak their terms of business as an interim measure to make this possible and this may provide some protection. The real solution is for the government to tweak the regulations (again!) which they could do through the planned Renters’ Reform Bill. Better still the need to sign could just be eliminated as it provides little true benefit.

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David Smith is a Partner located in Londonin our Commercial Litigation department

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Neli Borisova is a Solicitor located in Londonin our Commercial Litigation department

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