Foxtons' "timebomb" commission ruled unfair

LONDON (Reuters) - The High Court ruled on Friday that certain conditions used by estate agent Foxtons in its rental agreements with landlords were unfair and represented a "trap" or "timebomb."

The Office for Fair Trading (OFT) took action last year against Foxtons, which operates in London and the southeast, following complaints about terms in its contracts with landlords.

These included requiring a landlord to pay "substantial sums" in commission when a tenant stayed in a property beyond the initial rental period, even if Foxtons had done nothing to persuade the tenant to stay and did not collect rent.

Other conditions required landlords to pay full commission fees of 2.5 percent to Foxtons if the home was subsequently sold to the tenant.

The OFT said the High Court had ruled that the commission charges represented a "trap" or timebomb" for landlords and that such terms had to be flagged prominently.

The judge said he would not expect such important obligations to be tucked away in small print and not specifically brought to customers' attention, the OFT said.

The OFT said it would now ask the High Court for injunctions to prevent Foxtons, which is owned by private equity firm BC Partners, from continuing to use the terms in its contracts.

"This ruling sends out a clear and unambiguous message that businesses offering services need to ensure unexpected or surprising terms are not hidden away in small print," said OFT's Chief Executive John Fingleton.

"Contracts need to be written in clear and straightforward language with important provisions, particularly those which may disadvantage consumers as in this case, given prominence and actively brought to people's attention."