Business Legal News from Blackadders Solicitors

Further to my previous articles regarding the introduction of the Property Factors (Scotland) Bill and the Tenancy Deposit Schemes (Scotland) Regulations 2011, I can now report that the first tenancy deposit scheme has been approved by Housing Minister, Keith Brown.

The first tenancy deposit scheme to be approved is the Letting Protection Service Scotland. Two further schemes are also being considered with the intention of starting all three schemes, which will operate across Scotland, from 2 July 2012.  In order to provide landlords with time to prepare, the legal requirements to submit deposits into a scheme will come in to effect from November 2012.

Once in place, landlords or their agents must pay deposits to an approved scheme and provide their tenants with key information about the tenancy, the deposit and the scheme which is protecting it. The schemes will be free to participate in and will provide access to a free and independent dispute resolution service.

Please refer to my previous articles for a more in-depth discussion of what this all means for landlords and tenants.

http://blackaddersbusinesslegalnews.com/2011/05/04/the-tenancy-deposit-schemes-scotland-regulations-2011/

The outcomes in the cases of Scottish Widows Services v Harmon/CRM Facades and Scottish Widows Services v Kershaw Mechanical Services are a wake up call that liability can be incurred in providing collateral warranties.

Scottish Widows Services were assigned the lease to Port of Hamilton, as well as the collateral warranties provided to the original Tenant by the contractor and architect for the development. The roof of the building was leaking so Scottish Widows Services sought damages from the contractor and architect, for issues/defects in a development they had leased.

Scottish Widows Services knew of the defects before they acquired its interest and as such were in a position where they didn’t have any obligation under the lease to repair these defects. They did however chose to carry out the repairs of the own volition. They then sought to recover, but where they entitled to?

The contractor and architect argued that the losses where self-inflicted as Scottish Widows Services knew the position when they were entering into the lease. Scottish Widows Services then accepted the premises in the condition it was in at the start of the lease (including the defects). It was also argued that the repairs were done for Scottish Widows Services’ convenience and not as a legal obligation. These arguments did not carry any weight with the court as the breach of collateral warranty remained the dominant cause of loss.

Scottish Widows Services only had to prove that they incurred reasonable costs in fixing the defects, which were a result of the breach of the collateral warranty. A beneficiary of a collateral warranty is not normally party to the terms of the original contract or appointment, they are unlikely to have an existing or future relationship with the granters of the warranty, so they are likely to pursue any legal remedy robustly.

Kyle Moir
Solicitor

The Office of Fair Trading declared in 2009 that the level of customer dissatisfaction in the property factor industry is far higher than any other industry or sector providing services to the public in Scotland.

The Property Factors (Scotland) Bill was drafted by Govan Law Centre and was introduced to the Scottish Parliament on 1 June 2010 with the specific aim of addressing the failings of the property factor industry in Scotland.

The Bill introduces:

• A mandatory registration scheme
  This will require every person appointed as a property factor to pass a ‘fit and proper person’ test. The register would be funded by an annual registration fee paid by property factors.
• A statutory code of conduct
  This will set out basic minimum standards of practice for all registered property factors. Homeowners would rely on these in their day-to-day dealings with their property factor. In extreme cases any factor falling below the minimum standards could be de-registered, preventing them from causing ongoing detriment to homeowners.
• An accessible dispute resolution procedure
  It is expected that a Property Management Committee will be set up to hear disputes between homeowners and factors. This Committee would have the power to ensure compliance with any contracts and minimum standards of practice, and where appropriate, require the factor to make a compensatory award or refund to the homeowner.

Mike Dailly, Principal Solicitor of the Govan Law Centre, said: “Property factors must be the only industry in Scotland who are virtually unlicensed and unregulated. When one-third of your customers are unhappy with the service you provide it’s time for a statutory solution. The Scottish Government are consulting on a voluntary accreditation scheme, but we’ve had self-regulation for centuries and it hasn’t worked. The people of Scotland need a solution with legal teeth, and the bill provides that solution in a fair and measured way.”

It is anticipated that the provisions of the Bill will come into force on 29 September 2011.

Nicola McCafferty
Solicitor

The Latest Ofgem figures show a boom in small-scale renewable energy systems across the UK.

Since the introduction of the feed in tariff (FIT) by the previous government in April 2010, over 9000 new wind, solar, hydro and micro combined heat and power projects have been installed by both householders and commercial organisations.  Installations in August doubled those in July with nearly 4000 householders going green.

FITs are sometimes better known as ‘Clean Energy Cashbacks’, which describes exactly how they work.

Favourite small-scale renewable energy technologies in the UK remain wind energy and solar power, although hydro-electric power is becoming more popular with almost 40 new projects last month.

The FIT is also attracting European solar companies to the UK. For a fact sheet on the FIT we recommend a visit to the UK energy regulator Ofgem website.

Shaun Mackintosh
Associate