Completion is not the end. Signing the sale and purchase agreement and receiving the completion funds triggers a series of obligations that run for months — sometimes years — after the deal closes. Sellers who treat completion as the finish line often find themselves exposed to earn-out disputes, covenant claims, or TUPE liabilities that could have been managed differently.
This guide covers the key post-completion obligations for estate and letting agency sellers: what you must do, what you must not do, and where the common disputes arise.
For a full overview of the transaction process, see how to sell your estate or letting agency.
Earn-Out Period Obligations
Most estate and letting agency sales include a 12 to 24 month earn-out tied to Annual Management Fee Income — AMFI. That earn-out period imposes specific obligations on the seller: both positive (things you must do) and negative (things you must not do).
What You Must Do
Cooperate with the transition. The SPA will typically include an express obligation to cooperate with the buyer in the transfer of the business. In practice this means making yourself available to introduce the new management team to key landlords and property managers, answering operational questions, and not creating obstacles to a smooth handover. A seller who withdraws cooperation and becomes uncontactable during the earn-out period gives the buyer grounds to argue that any AMFI decline was caused — or contributed to — by the seller’s failure to cooperate.
Do not damage AMFI. Your earn-out payment depends on AMFI generated during the earn-out period. You have a direct financial interest in protecting it. But the SPA will usually go further and impose an express obligation not to act in a way that damages AMFI — even inadvertently. What counts as damaging AMFI? Negative communications to landlords about the new management, failing to complete a proper software handover so tenancy renewals fall through, or undermining the buyer’s relationship with the property management team.
What You Must Not Do
Non-interference: no landlord solicitation. The most common post-completion breach is a seller who starts a new agency and writes to — or calls — former managed landlords to encourage them to move their portfolio. Even where the contact is framed as “keeping in touch,” unprompted outreach to managed landlords during the earn-out period is likely to breach both the non-interference provisions of the SPA and the restrictive covenants that follow completion.
No property manager approaches. Similarly, approaching former property managers to recruit them to a new venture during the earn-out period undermines the buyer’s ability to maintain the team — and the AMFI that flows from it. SPAs increasingly include explicit non-solicitation provisions for key staff as well as landlords.
AMFI Monitoring Rights
If your earn-out is structured around AMFI thresholds, you have both a right and a practical need to monitor how the buyer calculates it.
Request regular AMFI statements. Your SPA should entitle you to monthly or quarterly AMFI statements during the earn-out period. If it does not, or if the buyer is slow to provide them, raise this early. You cannot challenge a shortfall you have not been informed about.
Review the calculation methodology. AMFI is not a statutory term. It is defined in your SPA — and those definitions vary. Check what the buyer is including and excluding against the precise earn-out definition in your agreement. Common disputes arise where:
- The buyer reclassifies fee lines previously counted as managed fee income as non-qualifying income
- Properties switch from managed to let-only without the seller being notified, reducing the AMFI base
- Deductions are applied for voids or other items not permitted by the earn-out definition
Challenge deductions and definition drift promptly. Earn-out disputes become exponentially harder to resolve the longer they are left. If you believe the buyer is understating AMFI, raise it in writing at the first opportunity — your SPA will contain dispute resolution provisions and almost certainly a time limit for challenging earn-out calculations. Missing that window can extinguish your claim.
Earn-out definition precision is critical. If you are still at the heads of terms stage, the single most important thing you can do is ensure the earn-out definition is precise, objective, and leaves no room for the buyer to exclude income streams that were generating fee income at the time the agreed price was set.
For a detailed treatment of earn-out structures, see the estate and letting agency earn-out guide.
Management Agreement Handover
The managed portfolio — the rent roll that drives the sale price — is transferred through the assignment or novation of management agreements. The quality of this handover has a direct impact on retention, and if your earn-out is still running, on your income.
Signed agreements and landlord contacts. Ensure every management agreement in the portfolio is signed and transferred to the buyer. Where agreements are unsigned, verbal, or informal — a common feature in older portfolios — the buyer may have no enforceable right to manage, and landlords may take the opportunity of the ownership change to move.
Tenancy documents. All current tenancy agreements, renewal records, and deposit protection certificates should transfer with the portfolio. Missing documentation is a retention risk: a landlord who discovers the new agent cannot produce the original AST or deposit protection details is a landlord who is considering their options.
Property management software access. The handover of software access — typically a system like Jupix, Alto, or Reapit — is operationally critical. Confirm that user accounts, workflow data, and landlord and tenant records have been fully transferred and are accessible to the new management team before you withdraw your own access.
Landlord introduction communications. The communication to landlords about the change of management is one of the most important steps in retention. It should be:
- Coordinated with the buyer — agreed tone, timing, and content
- Reassuring in tone — emphasising continuity of service and team
- Timed correctly — landlords should receive sufficient notice to ask questions before they notice any change
An introduction letter that creates anxiety — or that arrives after the landlord has already noticed a change in contact details — is a retention risk. A well-handled communication protects AMFI. A poorly handled one gives landlords a reason to move.
CMP De-Registration
If you were holding client money — tenancy deposits, rent — as part of the managed lettings operation, you are likely a member of a Client Money Protection scheme such as ARLA Propertymark, RICS, or another government-approved scheme.
Close CMP membership once you no longer hold client money. If you remain registered as a CMP member after completion — without actually holding client money — and a claim is subsequently made against your membership, you may face difficulty establishing that the claim relates to a period before your exit.
Get written confirmation of the close date. Request written confirmation from your CMP scheme confirming the date on which your membership was terminated. This protects you against post-sale claims that purport to relate to your period of membership and creates a clean record of when your obligations ended.
TUPE
Where the estate or letting agency has employees, the Transfer of Undertakings (Protection of Employment) Regulations 2006 — TUPE — will apply to a business asset sale. It does not generally apply to a share sale where the employing entity does not change.
Pre-completion liabilities rest with the seller. Under the terms of most SPAs, employment liabilities arising before the completion date remain the seller’s responsibility under the indemnity provisions. This includes claims for unfair dismissal, unlawful deduction of wages, or discrimination rooted in pre-completion conduct.
Post-completion liabilities pass to the buyer. Once the TUPE transfer has occurred, the buyer takes on the employment contracts and associated liabilities for future conduct. The buyer cannot escape liabilities that transferred with the employees — even where those liabilities were not disclosed.
The key TUPE dispute: was the claim pre or post completion? Employment tribunal claims often arise after the completion date but may be rooted in conduct that occurred before it. The SPA indemnity provisions define the allocation, but in practice — particularly where an employee was treated poorly in the run-up to completion — disputes about which party bears the liability are common. Take advice before completion if there are any outstanding grievances, disciplinary matters, or potential claims among the transferring staff.
Restrictive Covenant Compliance
Your SPA will almost certainly contain restrictive covenants that survive completion. The two principal categories are:
Non-compete. A prohibition on establishing or working in a competing estate or letting agency business within a defined geographic area for a defined period — typically one to two years. The geographic scope matters: a restriction covering a radius from each managed property in a major city may effectively prohibit you from operating anywhere in that market. These covenants are enforceable if reasonable — courts will consider scope, duration, and the legitimate business interest being protected.
Non-solicitation of landlords and staff. A prohibition on soliciting the managed landlords or employees of the sold business for a defined period. Non-solicitation is narrower than non-dealing: it prohibits you from actively approaching former landlords, but does not — in most standard drafting — prevent you from accepting a landlord who approaches you. The distinction matters in practice.
Non-solicitation vs non-dealing. If your buyer has insisted on a non-dealing covenant, that is materially wider. It would prevent you from accepting any approach from a former managed landlord, even an unsolicited one. Ensure you understand which covenant you signed before starting any new venture.
What counts as solicitation. This is a common area of dispute. Sending a newsletter, posting on LinkedIn, or announcing a new business — even without directly contacting individual landlords — may be characterised as solicitation if it is directed at a class of people the covenant is designed to protect. Take legal advice before making any public communications about a new venture during the covenant period.
CGT and the Earn-Out: Marren v Ingles
The interaction between earn-out structures and Capital Gains Tax creates obligations that continue beyond completion.
Earn-out right valued at completion. Under the rule in Marren v Ingles [1980] STC 213, the right to receive an earn-out payment is itself a separate asset, created at completion. At the completion date, that right is valued — typically at a discounted present value of the expected earn-out — and forms part of your disposal proceeds for CGT in the year of completion. You pay CGT on this assumed value even though you have not yet received the earn-out.
Additional return or amendment when earn-out resolves. When the earn-out period ends and the actual payment is known, you will need to file an additional CGT return or amend your original return to reflect the difference between the assumed value at completion and the actual payment received. If the actual earn-out exceeds the assumed value, you pay additional CGT on the excess. If it is lower, you may be entitled to a repayment.
Amendment time limit applies. HMRC’s time limit for amending a self-assessment return is four years from the end of the tax year in which it was filed. If your earn-out resolves years after the original completion, take advice on whether the amendment window is still open and what procedural steps are required.
BADR on the whole gain at completion. Business Asset Disposal Relief — which reduces CGT to 10% on qualifying disposals — applies to the full gain in the completion year, including the assumed earn-out value at completion. Provided BADR conditions are met at completion, subsequent earn-out receipts above the assumed value are also typically sheltered at the 10% rate, subject to the £1 million lifetime limit.
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Frequently Asked Questions
What obligations does a seller have after completing an estate agency sale?
Sellers typically have obligations to cooperate with the transition, not to damage AMFI during the earn-out period, not to solicit former managed landlords or property managers, and to comply with restrictive covenants on non-compete and non-solicitation. CMP scheme de-registration and a clean TUPE handover are also required where applicable.
Can I start a new lettings agency immediately after selling my portfolio?
Only if your SPA does not contain a non-compete covenant, or the covenant period has expired. Most SPA non-competes run for one to two years and cover a defined geographic area. Starting a competing business in that area within the covenant period exposes you to an injunction and a damages claim.
What is AMFI and why does it matter post-completion?
AMFI — Annual Management Fee Income — is the recurring managed fee income from the lettings portfolio and the basis on which earn-out payments are typically calculated. After completion, sellers need to monitor AMFI statements carefully and challenge any deductions or reclassifications not permitted by the earn-out definition.
What happens to CGT if my earn-out is less than expected?
Under Marren v Ingles, you pay CGT in the completion year on the assumed value of the earn-out right. If the actual earn-out is lower than that assumed value, you may be entitled to amend your self-assessment return and receive a CGT repayment. Time limits apply, so take advice from a tax specialist promptly once the earn-out resolves.
What is the difference between non-solicitation and non-dealing covenants?
Non-solicitation prohibits you from actively approaching former managed landlords or staff. Non-dealing goes further and prevents you from transacting with them at all — even if they approach you. Understanding which covenant you have signed is essential before starting any new business or marketing activity.
When should I de-register from my CMP scheme?
As soon as you have transferred all client money to the buyer and ceased to hold any client money. Request written confirmation of the de-registration date to protect yourself against post-sale claims that purport to arise during your period of membership.